Fresh off his election victory, President Obama is pushing back against GOP efforts to reform Medicare — promising that only he can save the program.
Indeed, the president’s surrogates regularly brag that the Obama health-care law “extends the program’s life by eight years.” In other words, the president will save Medicare by making sure it doesn’t go bankrupt . . . until a few years after he leaves office.
That’s not good enough.
To truly fortify Medicare and preserve it for the next generation, we need the entire program modeled on the only part that is working for both seniors and taxpayers — Part D, the Medicare prescription-drug benefit.
That means an honest assessment of Rep. Paul Ryan’s plan, which would convert Medicare to a premium-support program that relies on private competition. But Obama has expressed little interest in such an effort — even though it’s the only thing that’ll work.
The Department of Health and Human Services just announced that monthly premiums in Part D will again average $30 next year. That number’s basically held steady for four years; premiums are only up 2.5 percent since 2006.
Contrast that with the typical premium of an employer-sponsored family health insurance plan, which rose 4 percent from 2011 to 2012 and 9 percent the year before, according to the Kaiser Family Foundation. In other words, Part D’s costs are holding steady even as health costs are growing just about everywhere else.
Critics of Part D are right to point out that it’s an unfunded liability: When Congress created the program, it included no dedicated financing or offsetting spending cuts; the entire cost was simply added to the budget deficit. That’s lamentable. Part D should’ve been paid for at its creation.
But the fact remains that, unlike so many other government programs, Part D’s price tag has proved far lower than expected. As in every other market, competition in Part D has resulted in lower prices and better service.
Since the program began, the Congressional Budget Office has repeatedly lowered its cost estimates for the program. Earlier this year, the agency issued a report projecting that Part D would cost about 43 percent less next year than it had estimated back in 2004. At the same time, the CBO increased its cost projections for the other major parts of Medicare.
But these savings haven’t come at the expense of coverage or the satisfaction of beneficiaries. The existence of Part D has helped ensure that almost 90 percent of Medicare beneficiaries have stable drug coverage. And the vast majority are happy: Multiple surveys have shown satisfaction levels for Part D at near or above 90 percent.
Facts like these are proving inconvenient for many Democrats, who have long disliked Part D.
Back in 2003, House Democratic Leader Nancy Pelosi predicted that “most seniors will be worse off,” under Part D. Sen. Tom Harkin (D-Iowa) scoffed at the program’s design. “We hear the claim that private-sector competition will drive down costs and save Medicare. Nonsense!”
Fast-forward to 2012. That “nonsense” is now reality.
Indeed, contrary to Sen. Harkin’s claims, market competition is the reason Part D has cost taxpayers less than originally estimated. Beneficiaries have the power to choose drug plans that work for them — and providers have to compete for seniors’ business. There’s no one-size-fits-all drug plan — unlike the rest of Medicare.
Despite the program’s success, some Democrats are still trying to undermine its competitive design. They’ve repeatedly proposed giving federal bureaucrats the power to implement price controls within the system — and thereby undermine the private-sector competition at the heart of the program.
Some have also called for added rebates from drug makers for “dual eligible” seniors — those who are enrolled in both Medicare and Medicaid — to try to further reduce Medicare spending. But such a policy would simply saddle seniors with additional costs. Former CBO chief Douglas Holtz-Eakin has estimated that these so-called rebates would drive Part D premiums up by 20 percent to 40 percent.
What Congress needs is a plan to preserve Medicare, not destroy it. President Obama’s agenda, by his own admission, leaves the program on the road to fiscal collapse.
Dee Stewart is president of Americans for a Balanced Budget, a national grassroots advocacy group.