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The Battle Over Medicare “Part D”




This website has never supported socialized medicine in any form. Nor have we ever supported the unsustainable expansion of government entitlement programs.

Whether originating from Republican or Democratic administrations, we oppose entitlement expansion. How come? It’s simple: A bankrupt country (one that’s $17.5 trillion in the red, actually) shouldn’t keep making promises it can’t keep  – especially when the “problems” government purports to be solving keep getting worse with each new escalation of government’s “solution.”

And so while we have criticized U.S. President Barack Obama’s colossally misguided socialized medicine law, we have also written frequently against the George W. Bush-led extension of a prescription drug benefit to Medicare (the so-called “Part D” expansion which took effect on January 1, 2006).

Neither expansion strikes us as consistent with government’s core functions …

Of course while we oppose Medicare Part D on principle, we strenuously object to recent efforts by the Obama administration to remove many of the “market-based” components of the program and replace them with the sort of price controls and de facto health care rationing that we see in other entitlement programs.

While funded by taxpayers (i.e. the part of “Part D” we object to), the program is at least structured around the free market principles of choice and competition. In other words even though it is subsidized, the payouts flow through a market-based delivery system – not one in which government bureaucrats choose specific medications, physicians or treatment plans.

That has made Part D one of the few government programs to come in below its anticipated price tag – 45 percent below if you believe the number crunchers at the Congressional Budget Office (CBO).

Surprisingly, this rare government “success story” (again, if you believe taxpayers should be in the business of subsidizing this benefit) is being targeted by Obama. According to a proposed rule change introduced by the administration in January, much of the choice and competition that keep down the costs of Part D would be eliminated.

Specifically, Obama’s rule change would limit the number of plans offered under the program – a move which the American Action Forum (AAF) estimates would force 14 million seniors to have to switch to different, costlier plans. The net cost associated with those changes? An estimated $10 billion.

Sound familiar?

Clearly cash-strapped Americans and tapped out taxpayers can’t afford that sort of hit …

In response to GOP-led opposition, the Obama administration has temporarily tabled this rule change – although it’s clearly not taking it off the table. In fact most observers believe the plan is to make a major push on its behalf after the 2014 elections.

Again, we oppose government-subsidized entitlements on principle. We’re not against a reasonable safety net for society’s least fortunate, but such benefits must be narrowly drawn, tightly regulated and implemented via market-based delivery systems – not centrally controlled bureaucracies.

Oh, and most importantly that health care safety net must be sustainable … otherwise we wind up with a society that incentivizes dependency – which of course only exacerbates the problem and adds momentum to the downward spiral.

We have long opposed entitlement expansions like “Part D,” but we also oppose Obama’s efforts to strip the program of its market dynamics – a move which would send costs soaring at a time when Americans can least afford to shell out any additional money (on anything). We also support GOP efforts to extend market-based delivery systems to other Medicare entitlements – although we do not believe such such reforms should take the place of a long-overdue reduction (and redefinition) of America’s broader unsustainable entitlement problem.

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