While the President sharply criticizes Mitt Romney over plans to further privatize Medicare, he crows about the success of private health plans in delivering prescription drug benefits and health care services to Medicare beneficiaries.
The Obama administration reports that it’s satisfied with the private plans. “Medicare Advantage premiums down 7 percent on average, enrollment up 10 percent,” the administration announced in February. It also claimed that the quality of health care provided by Medicare Advantage plans is steadily improving.
Earlier this month the Obama administration released the results of competitive health care bidding for 2013: “Medicare prescription drug premiums to remain steady for third straight year.”
According to the Medicare Payment Advisory Commission report released in June, Federal spending on Medicare drug benefits is 30 percent lower than the Congressional Budget Office predicted when the prescription drug legislation was passed in 2003. That’s great news for seniors and a huge win for privatization.
Given these statistics, why do Democrats claim that the GOP plan would “end Medicare as we know it”? One possible answer is that the Center for Medicare and Medicaid Services (CMS) has aggressively regulated insurers to protect beneficiaries. The GOP is generally in favor of a market with less regulation.
The current proposal by Romney would preserve traditional Medicare as an option. It is believed that enrollment in private Medicare Advantage plans would grow faster if they prove more efficient than the government-run program.
Private insurers are pioneering health care innovations that keep people out of the hospital. How competing plans hold down costs is still unclear.
Although Medicare Advantage still needs more time to prove its value, Medicare’s prescription drug plan program is a solid success. The prescription drug benefit was added to Medicare in 2003 by a Republican-led Congress. Democrats made dire predictions.
“Most seniors will be worse off,” said Representative Nancy Pelosi, the House Democratic leader. “This is the beginning of the end of Medicare as we know it.”
Senator Tom Harkin, Democrat of Iowa, said: “We hear the claim that private-sector competition will drive down costs and save Medicare. Nonsense!”
Lawmakers on both sides were concerned that few insurance companies would be willing to offer stand-alone plans for prescription drugs. The reaction by insurers was quite the opposite. Recognizing senior drug usage as a lucrative opportunity, insurers rushed into the Medicare market.
In most states, beneficiaries are able to choose from 25 to 35 prescription drug plans. Many of the drug plans are also bundled with Medicare Advantage HMO and PPO plans.
The Medicare Payment Advisory Commission Report cites competition as a factor holding down costs. In addition, seniors who purchase a Medicare Part D prescription drug plan benefit from the emerging trends in the pharmaceutical marketplace, including the use of low-cost generic drugs.