Health Care Expert Condemns New Liberal Report on Medicare Drug Prices

Research used in a new report by the left-of-center group Families USA, apparently meant to bolster House Speaker Nancy Pelosi's effort to give government employees the power to "negotiate" drug prices under Medicare Part D, is being called deceptive by a health care expert from the National Center for Public Policy Research. "The Families USA report proves the wisdom behind Mark Twain's quip 'There are lies, damned lies and statistics,'" said National Center senior policy analyst David Hogberg, Ph.D.

Families USA's "No Bargain: Medicare Drug Plans Deliver High Prices" purports to compare the drug prices paid by the insurance plans that administer Medicare Part D to those paid by the Veteran's Administration. It claims that drug prices paid under Medicare Part D are much higher than those paid by the VA, in some cases, over 1,000 percent higher.

However, says Hogberg, the report draws its Medicare drug price data from nonrepresentative sources. As an example of the flawed nature of the Families USA report, Hogberg notes that the Medicare drug price data used in the report to compare Medicare drug costs to the VA's drug costs come from only two counties - Montgomery County, Maryland and Hamilton County, Ohio. Based on median household income, both counties are above the national average. Montgomery County, for instance, is the fourth-richest county in the nation. Since wealthier areas, on average, tend to pay higher prices, Families USA's use of these counties as the source of their sample data all but guarantees that the Medicare drug prices data in their study will be exaggeratedly high.

"I call that cooking the data, pure and simple," Hogberg said. "You also have to dig deep into the Families USA study to learn the VA doesn't 'negotiate' drug prices. The VA pays only 76 percent of the nonfederal average manufacturer price of a drug. That's not a 'negotiation,' that's a price control. So, Families USA has skewed its results by using Medicare data only from wealthy counties and comparing it to prices obtained nationally by the VA, which was imposing price controls." "I trust that sensible members of Congress and the media will dismiss this study for the nonsense that it is," Hogberg said.

In conclusion, Hogberg added, "In 2003, President George W. Bush signed into law a prescription drug program for Medicare, known now as Medicare Part D, that is administered by private drug companies. It bans Medicare from 'negotiating' directly with pharmaceutical companies. Proponents of government-run health care have long sought to remove this prohibition, but supporters of the ban believe that such 'negotiations' are akin to imposing government price controls, which all-but-inevitably lead to rationing, shortages, and a decline in health care quality."

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DANISH HEALTHCARE

"It is entirely possible to have a large welfare state, with generous benefits, without choking the economy," says Jonathan Cohn of the New Republic in a new series of articles, glorifying the Danish economic model.....

Finally, there are the "generous" non-cash social benefits of the Danish welfare state to consider, primarily the health care system, which all Danes can use free of charge. "Danish health care is no worse than the US version," Cohn states, "Yet we Americans pay far more for our system, because it's riddled with inefficiencies as insurance companies compete with one another to enroll healthy beneficiaries, rather than finance good care."

In fact, US healthcare is better than the Danish version, exactly because Americans spend more on healthcare than the Danes. As in most government-run healthcare systems, Danish patients face significant waiting times for many types of treatment that Americans can get immediately. The United States is also ahead of Denmark when it comes to employing modern technology. For instance, America has 62.1 DTX scanners (for osteoporosis) per 1 million people compared to 8.0 in Denmark. The ratio for MRI scanners is 27 to 10 in America's favor, and the ratio for CT scanners is 32 to 14.6, again in America's favor.

Furthermore, Americans have better access to many preventive drugs than Danes, who often have difficulties getting prescriptions until they show serious medical complications. Competition between insurance companies is exactly what causes this American superiority in access to drugs. Since the insurance companies work for profit, they have an interest in minimizing expenditures for hospitalizations and expensive treatment by encouraging their beneficiaries to stay healthy through preventive drugs and a healthy lifestyle. By contrast, the Danish health system is governed by narrow-minded bureaucratic interests that jealously guard their individual budgets and slow down the strategic shift from treatment to prevention that has taken place in the United States.

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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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