Tampering with Part D will not solve our debt crisis

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Given the current climate and the debate over the debt limit, reform of Medicare--which faces a significant fiscal crisis--is inevitable. Anticipating these changes, the White House and key Democratic leaders in Congress recently introduced the "Medicare Drug Savings Act of 2011" as a means of saving $112 billion over the next decade by reducing spending on Medicare Part D-the prescription drug program for seniors. Based on the presumption that manufacturers are making extraordinary profits from the government, the proposed legislation would mandate that drug companies give the federal government rebates for low-income seniors enrolled in Medicare Part D.

Under the proposed legislation, AEI's Joseph Antos, a former Congressional Budget Office official, and Guy King, a former chief actuary for Medicare, find that:

  1. Many Medicare Part D plans could change significantly by restricting their benefits or taking other actions that disproportionally affect the most vulnerable seniors.
  2. Premiums for seniors would be likely to increase, with the strongest impact borne by low-income seniors who are likely to be displaced from their current Part D plans unless they pay more.
  3. Government spending on Medicare as a whole is likely to increase, offsetting savings to the federal budget.

 

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI. Guy King is an independent actuary and former chief actuary for Medicare and Medicaid.

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About the Author

 

Joseph
Antos
  • Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI), where his research focuses on the economics of health policy — including the Affordable Care Act, Medicare, the uninsured, and the overall reform of the health care system and its financing. He also studies the impact of health care expenditures on federal budget policy.

    Before joining AEI, Antos was assistant director for health and human resources at the Congressional Budget Office (CBO). He has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget, and the President’s Council of Economic Advisers. He recently completed a seven-year term as health adviser to CBO, and two terms as a commissioner of the Maryland Health Services Cost Review Commission. In 2013, he was also named adjunct associate professor of emergency medicine at George Washington University.

    Antos has a Ph.D. and an M.A. in economics from the University of Rochester and a B.A. in mathematics from Cornell University.



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  • Phone: 202-862-5938
    Email: jantos@aei.org
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