US - Medicare to subsidize Pharma Business

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The US Congress has passed a bill to institute medicare drug benefits for the elderly in the US, a move which may in time prove to be extremely costly to the US economy. Instead of reigning in the drug companies' pricing of prescription drugs, the administration prefers to use tax payers' funds to pay for medicines, effectively subsidizing the profitability of its drug industry.

Prices for prescription drugs in Europe are often a fraction of what patients are expected to pay in the US, and even in neighbouring Canada, drugs are so much cheaper than in the US that bus tours of senior citizens to Canada are commonly organized to stock up on prescription meds.

Rep. Ron Paul, in an article entitled Republican Socialism, quotes a National Tax Payers Union estimate that a few decades hence, Medicare is set to consume close to 40 % of the US Gross Domestic Product!

"Phony senior lobbies", states Paul, "want free drugs paid for by taxpayers; American corporations want to dump their retirees into Medicare at the expense of taxpayers; pharmaceutical companies want huge windfalls provided by taxpayers; and politicians want to get reelected by passing incredibly shortsighted legislation courtesy of taxpayers. Most of today’s politicians will never have to answer to future generations saddled with huge federal deficits because of this expansion of Medicare. Those generations are the real victims, as they cannot object to the debts being incurred today in their names."

While future generations will likely have to pay the debt, the pharmaceutical companies who backed Bush's election bid will be cashing in big time.

Rep. Ron Paul, MD
Medicare prescription drug bill - Republican Socialism
Tue Nov 25 14:02:30 2003

The Senate voted 54-44 Tuesday to approve the $395-billion Medicare prescription drug bill

Republican Socialism

by Rep. Ron Paul, MD

November 25, 2003

Congress worked late into the night this past weekend to pass a Medicare prescription drug bill that represents the single largest expansion of the federal welfare state since the Great Society programs of the 1960s. The new Medicare drug plan enriches pharmaceutical companies, fleeces taxpayers, and forces millions of older Americans to accept inferior drug coverage ú while doing nothing to address the real reasons prescription drugs cost so much.

Nothing from the government is free, of course, and prescription drugs will be no exception. The perception that seniors will be able to flash a Medicare card at the pharmacy and walk out without paying anything is completely false. In fact, many seniors will end up paying more out-of-pocket under the Medicare scheme than they do now with their private plans. The Medicare drug benefit requires monthly premiums, co-pays, and deductibles, just as private plans do. It also has gaps in coverage that no sensible person would accept if offered by a private insurer. Like all government programs, the Medicare drug entitlement will be shabby, degrading, and inferior to the private sector.

The vast majority of older Americans already have private prescription drug coverage that they don’t want changed, and this 78% of seniors may well lose their good private coverage altogether. In fact, the government’s own Congressional Budget Office estimates that at least one-third of all private companies will dump their retirees into the Medicare system as a result of the new bill. Big corporations love the Medicare drug plan, because they want to shift the responsibility for providing drug benefits to their retirees onto taxpayers. Dozens of major companies shamelessly advertised in the Washington Times and elsewhere in support of the Medicare bill for this very simple reason. Their pension plans are dangerously underfunded, so naturally they use their lobbying influence to promote a Medicare drug system. In this sense the Medicare bill is a taxpayer-funded corporate bailout for hundreds of American companies.

The financial impact of this legislation on taxpayers cannot be overstated. Government projections that the drug program will cost $400 billion over the next decade cannot be trusted, as existing Medicare programs cost 4 times more than estimated when they were created. The likely cost is at least $1 trillion over 10 years, and much more in following decades as the American population grows older. The Medicare “trust fund” is already badly in the red, and the only solution will be a dramatic increase in payroll taxes for younger workers. The National Taxpayers Union reports that Medicare will consume nearly 40% of the nation’s GDP after several decades because of the new drug benefit. That’s not 40% of federal revenues, or 40% of federal spending, but rather 40 % of the nation’s entire private-sector output! Clearly this new Medicare spending will bury our great-grandchildren unless we rethink the wisdom of ever-increasing entitlement programs.

Phony senior lobbies want free drugs paid for by taxpayers; American corporations want to dump their retirees into Medicare at the expense of taxpayers; pharmaceutical companies want huge windfalls provided by taxpayers; and politicians want to get reelected by passing incredibly shortsighted legislation courtesy of taxpayers. Most of today’s politicians will never have to answer to future generations saddled with huge federal deficits because of this expansion of Medicare. Those generations are the real victims, as they cannot object to the debts being incurred today in their names.

Dr. Ron Paul is a Republican member of Congress from Texas.

Ron Paul Archives

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Liberal analysts say new Medicare law will do more harm than good

By Julie Rovner

WASHINGTON (Reuters Health) - A group of former Clinton administration health officials Thursday blasted the Medicare bill President Bush plans to sign next Monday, saying the measure could lead to the demise of Medicare as it currently exists.

"Every page you look at you find more things (to suggest) the real goal is to replace traditional Medicare," Robert Berenson of the Urban Institute told a briefing sponsored by the Democratic think tank the Center for American Progress.

Berenson said the new "Medicare Advantage" program for private health plans "is better called the traditional-Medicare-disadvantaged" program, because it represents "an effort to tilt the playing field" towards private plans by significantly increasing their payments.

Private health plans will get subsidies to provide prescription drug coverage while private "Medigap" supplemental plans will be barred from offering drug benefits, and there is no limit on premiums that stand-alone "drug-only" plans could offer. For these reasons, many beneficiaries will find themselves with no choice but to leave traditional Medicare and enroll in a private plan if they want any of their medications paid for.

"The notion that you can stay where you are if you're not happy is just not right," Berenson said.

Judy Feder, Dean of Policy Studies at Georgetown University, predicted that seniors and the disabled on Medicare will be utterly confused by the complexity of the choices they will face -- but that they already understand how small the benefit is. "They get that the benefit is limited. It's not what they've been promised," she said.

And for the poorest beneficiaries, she said, "they will actually have a reduction in coverage," because the new law will allow them to be charged higher copayments than the joint federal-state Medicaid program currently allows, and because private plans will be able to limit which drugs are covered.

In fact, said Jeanne Lambrew of George Washington University, all beneficiaries will have to "choose blindly" when it comes to selecting their drug coverage, because plans will not have to tell beneficiaries in advance which particular medications are or are not covered.

At the same time, she said, plans will be able to change which drugs are covered during the course of a plan year, but beneficiaries "will be locked in" and will not be allowed to change.

But perhaps the biggest problem with the new Medicare bill, Lambrew said, is that Congress will likely spend so much time dealing with the fallout that it will not be able to move on to other critical health issues, including 44 million Americans with no health insurance at all.

"This will probably suck the oxygen out of the health policy debate for the next several years," she said. "The implications of what we're talking about go far beyond Medicare."

A recent comment on the medicare prescription drug benefits:

Prescription Drug Benefit Under Medicare...

A Guest Editorial by Joel M. Kauffman, PhD, Professor of Chemistry Emeritus, University of the Sciences in Philadelphia

January 9th, 2004

By now you must believe you have heard every possible objection and outrage to the Medicare Prescription Drug Benefit plan of 2003 that is now law. The loudest screams are opposites: that there are gaps in the benefit, the "doughnut hole", which should be plugged, and the maximum benefit should be set higher, meaning that it ought to cost us taxpayers more. Others cry that drugs cost too much, that the plan is a drug company subsidy, so costs should be forced down because drugs are in the same class as a public utility. The drug companies object that this will stifle all innovation.

What you and I have not heard in the mainstream media is the naked emperor kind of truth: several of the largest classes of drugs have no real benefits and should never have been approved by the FDA. Many have side-effects that are so serious that the resulting hospitalizations and deaths cost more than the drugs. The sale of prescription medicines in the United States exceeded $73 billion in 1994. Two researchers from the University of Arizona conclude that preventable illness and death from the misuse of these medicines cost the American economy over $75 billion that year; if lost productivity is included the cost rises to between $138 billion and $182 billion annually. (www.drugintel.com) Even the American Medical Association ad