May 8, 2018 at 5:00 am ET
Sad as it’s been to see the passing of first lady Barbara Bush and the immediate hospitalization of President George H.W. Bush, seeing the Bush family back in the news has been a pleasant change of pace.
The Bushes have a wonderful legacy of rational, dignified public service – of stalwart conservatism, unmarred by extremism. It’s been gratifying for former Bush 43 appointees (such as myself) to see former critics of the president changing their tune, given the current state of chaotic discourse.
What’s disappointing to see is how many in Washington — several in the president’s own party alas included — ignore the legacy of his most successful domestic program: Medicare Part D. The recent budget deal has exploded Part D’s carefully crafted equilibrium – throwing drug manufacturers under the bus to service health insurance companies struggling to stay profitable under Obamacare.
Medicare Part D has been a shining example of how conservatives can apply free market principles to policy, making government work better and cheaper rather than just denouncing it. Patient satisfaction has been almost 90 percent, and it’s come in amazingly under budget – as much as 40 percent according to some estimates.
What other government program is that successful?
For more than 10 years, private insurance plans compete with one another for Medicare enrollees under Part D. Seniors get to choose among plans based on the premiums, drug coverage and cost of copays. Whereas monopolies in other entitlement programs create an incentive to overcharge, Part D has driven insurance companies to keep their costs reasonable and push for bargains with drug companies.
Part D is focused on preventive care: Get seniors the right prescriptions to a) keep them healthy and b) avoid worse, more expensive problems down the line. To help phase out the so-called donut hole for many seniors, in 2010, drug manufacturers agreed to cover 50 percent of the cost of drugs, with the insurance companies and seniors splitting the rest, 25-25.
Splitting the costs like this has fueled the program’s market-driven success, kept seniors healthy and saved the taxpayers money. But the deficit-exploding budget deal in March threatens to change all that.
Under this new plan, Congress has changed the 50-25-25 approach to a 70-5-25 split, shifting the insurance companies’ duty to the drug companies. This disrupts the well-crafted equilibrium of the original plan and was preceded by exactly zero public debate.
If insurance companies no longer bear any of the cost for keeping the program affordable, the incentive structure of Part D explodes. Without that, Part D becomes just another entitlement program subject to the waste, fraud and abuse extant in any monopoly.
This change was a huge win for the insurance companies, and many are calling this a hidden bailout for Obamacare. Despite the fact that insurance companies have managed to make out like bandits under Obamacare, they fear that easy money is over, with the prospect of deteriorating state markets and rising costs. Insurance companies are profiting at the expense of drug manufacturers, who do the actual healing, rather than simply financing said healing for profit.
Many love to attack drug companies for being “too profitable” — and certainly there are those drug manufacturers that make wonderful villains for the media to pillory — but let’s remember that they actually do create the drugs that people need for longer, healthier lives. Drugs don’t just appear magically and somehow these companies steal them away to extort from the rest of us. Creating new drugs requires painstaking effort, a huge financial risk and massive amounts of expertise. If our society continues to attack the industry that creates medicine for us, the result will be less medicine.
How can Republicans, who have howled at the excesses of Obamacare in the face of crippling deficits, be the ones to rush to its aid?
Part D has been a successful model that the rest of the government should follow, not turn its back on. Certainly, this shouldn’t be the case for Republicans – who should be waving the Part D banner to show how their solutions can improve service and save money. During a tough mid-term election year, being able to brag about good policy seems like a better idea than sacrificing the best part of the Bush legacy to service Obamacare. There’s still the chance for Congressional Republicans to turn back the clock on this deal and save Part D.
And perhaps, incidentally, their jobs, too.
Jared Whitley is a former Senate and White House staffer, and he founded Whitley Political Media LLC after graduating from business school in Dubai.
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