Competition works for Medicare Part D

A study of the Medicare Prescription Drug Coverage Program, also known as Part D, reveals free-market competition is keeping drug prices down more effectively than price controls in Medicare's other segments. According to "Secretary's Progress Report IV on the Medicare Prescription Drug Benefit," by U.S. Health and Human Services Secretary Mike Leavitt, released June 14, allowing seniors to choose from a variety of coverage plans has kept costs 40 percent lower than the Bush administration expected after the president signed the Medicare Modernization Act into law in December 2003. This could save taxpayers billions of dollars over the next decade.

"[E]xperts estimated that the average [individual's] monthly premium would be around $37," Leavitt wrote. "Our analysis of actual enrollment finds that the average 2006 Part D premium is less than $24. This represents strong competition plus informed beneficiary choices. "The overall 2006 cost to the taxpayer has dropped about 20 percent from the July 2005 estimate, and estimates for the net total cost to Medicare for the 10-year period from 2006 to 2015 have been cut by $180 billion," Leavitt continued. "State phase-down contributions over the same period are now projected to be $39 billion less."

Model Program?

Some free-market advocates believe Part D's competitive success could lead to price controls being removed throughout the entire Medicare program in the future. "The early evidence with the Part D program shows that competition can work in Medicare," said Grace-Marie Turner, president of the Galen Institute, a policy research group in Alexandria, Virginia. "Drug plans competed to encourage seniors to sign up, by offering more attractive benefits and lower premium prices, and seniors responded by picking plans that offered the best value. The reason the drug plans were able to offer lower prices is that they were able to negotiate with pharmaceutical companies for lower drug prices. "This is the market working to provide better value for beneficiaries and lower costs for taxpayers," Turner said. "We finally can see that the health sector can respond to the forces of competition and be better for it!"

Mixed Views

Other free-market advocates were skeptical of Leavitt's report. Twila Brase, president of the Citizens Council on Health Care in Minnesota, interpreted the findings cautiously. "The 40-year history of Medicare shows that government programs start out with a bang, and once everyone is a captive participant, prices increase and access declines," Brase explained. "In addition, despite the unanticipated drop in estimated cost to taxpayers, the drop is not a saving. The cost to taxpayers is still $746 billion over the next 10 years. That's $75 billion a year taxpayers didn't have to pay before Medicare Part D became law."

Mike Cannon, director of health policy studies at the Cato Institute, a libertarian think tank in Washington, DC, said Leavitt's optimism is shortsighted. "Medicare Part D dumped more weight on an already sinking ship. Now Congress and the Bush administration are saying, 'See, it's not sinking that much faster.' This is success?" Cannon asked. "What Republicans see as short-term savings will quickly disappear as seniors, drug manufacturers, and politicians learn to game the system. "Everyone from conservative Republicans to left-wing Democrats are already lining up with legislation that would increase the cost of this program. Part D is a disaster of epic proportions," Cannon said.

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More surgery cancellations in Queensland public hospitals



The State Government has cancelled elective surgery for up to 500 patients who would have had their operations after the election. The Royal Brisbane and Women's Hospital cancellations span 151 surgical sessions - up to 500 operations - over five weeks. Premier Peter Beattie said the cancellations were planned months ahead.

But Liberal leader Bruce Flegg said yesterday surgeons were only advised on Wednesday and patients would not be told until Monday - two days after the election. Dr Flegg said it was a slap in the face for patients, some of whom would vote for Labor. He produced leaked documents with the subject heading, "rolling cancellations", which showed that more surgery could be postponed. The documents reveal general, vascular, orthopedics and urology surgery will be suspended.

The memo from the hospital's surgical team to "interested parties" said that from September 25 to October 6, upgrades were scheduled for the surgical day care unit and the sterile processing centre. However, it does not reveal why operations need to be cancelled from Monday.

"These massive surgery cancellations are right across the board, from category one to category three," Dr Flegg said. "There is no doubt that cancelling people's operations in urgent cases put people's lives at risk. "Again we have hundreds and hundreds of Queenslanders getting a little slip in the mail saying, 'Don't come in on Monday, we have cancelled your operation'. "This is a Premier who stood with his heart and said, 'We're getting more doctors and nurses. We're fixing health'."

Mr Beattie accused Dr Flegg of "political mischief" and said very few surgeries would be cancelled. But Dr Flegg said Mr Beattie's blase excuses were a reason why visiting medical officers, who were among the backbone of public hospitals, were leaving the system. "Constant cancellations are exactly why the number of visiting specialists in Queensland has almost halved under the Beattie Government."

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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