Democrats are pushing for the President to expand Medicare to age 60 eligibility and add new dental and hearing benefits. They say the cost can be paid for by simply allowing Medicare to negotiate drug prices although the Congressional Budget Office disagrees by a $200 billion difference in savings over ten years.
At the heart of the plan is a call to lower the eligibility age for Medicare to 60 from 65, adding about 23 million Americans to the federal health program for seniors at a cost of $200 billion over 10 years. The lawmakers also are pushing to expand Medicare benefits to to cover dental, vision and hearing, which would cost about $350 billion over 10 years. NYTs 5-27-21
But like all grand proposals from Congress, there are consequences. Consequences that are rarely explained to the public when selling the idea. In this case there are two important facts.
Negotiate just like the VA. To get the discounts it does, the VA uses a strict National formulary which is generally less visible to patients because the VA also dispenses the medication.
Like many federal programs, the VA has statutorily mandated access to favorable drug pricing. It also operates a national formulary and can exclude medications that the agency’s formulary committee concludes are inappropriate for the patient population or should be subject to prior authorization. That, in turn allows, the VA to negotiate even deeper discounts in some cases, particularly when there are multiple suppliers of either the same (generic) ingredient, or a closely comparable brand medicine.
Formularies are also used by Medicare Part D plans to obtain their discounts. These formularies are roundly criticized by patients when they find the medication prescribed by their doctor is not covered by their Part D plan.
BUT THE RX FORMULARY ISSUE is not the only consequence. Medicare reimburses health care providers significantly less than private insurance:
Private insurers paid nearly double Medicare rates for all hospital services (199% of Medicare rates, on average), ranging from 141% to 259% of Medicare rates across the reviewed studies.
The difference between private and Medicare rates was greater for outpatient than inpatient hospital services, which averaged 264% and 189% of Medicare rates overall, respectively.
For physician services, private insurance paid 143% of Medicare rates, on average, ranging from 118% to 179% of Medicare rates across studies.
What are the consequences of greatly reduced revenue on hospitals and other health care providers? On the availability of services? Private insurance negotiates reimbursement rates. Medicare sets what it will pay as a way of controlling costs.
Simply adding 23 million Americans to Medicare is not as simple as it may appear. Good, or bad … consequences ‼️