Fix the Budget Deal Medicare Part D Gift to Insurers

A few weeks ago, I wrote that the Medicare Part D provision in the Bipartisan Budget Act (“BBA”) of 2018 is bad policy. Introduced in at the eleventh hour, the provision will undermine Medicare Part D, the only Medicare program that relies on free market principles to keep costs down.


As I mentioned earlier this month, the BBA “will incentivize insurance plans to push patients through the initial coverage stage into the catastrophic stage much faster, costing taxpayers more in the long run and undermining patients’ access to medicines.”

Now, Morning Consult ran a piece by Matt Kandrach of Consumer Action for a Strong Economy (CASE) who also sees the risk of this recent policy change.

Kandrach hits the nail on the head, going even further to make the case that the BBA’s changes to Part D pushes us closer to a single-payer government run healthcare system:

The implications of this budget deal are much greater than just the price tag. When government gets into the business of health care, it distorts the market, limits competition and increases costs. And that’s exactly what the BBA has done. As the financial burden on government expands, the easier it becomes for Washington to justify making critical decisions about quality and rationing of care.

Worse yet, the budget deal undermines the risk-based value of plans, meaning some plans may no longer qualify to participate in Part D, further limiting competition and consumer choice. Ultimately, if too few plans qualify, a public option — a government run plan — could be triggered in Part D, moving the nation even closer to a single-payer health care system.


Medicare Part D is a popular program because its competitive structure and private negotiation process has kept costs down and helped seniors afford the drugs they need. According to the National Review, Part D’s “market structure has worked precisely as intended. Insurers have to compete for enrollee dollars, steadily reducing their prices and improving benefits. Today, overall Part D costs are $350 billion less than estimated when the program was created in 2003. And it’s wildly popular among enrollees: Nine out of ten report being satisfied or more than satisfied with their coverage.”

The BBA blows up the national deficit – certainly something many conservatives are upset about — but we’re working on rolling that back. Changes to Medicare Part D—changes that could undermine the whole program—are not so easily fixed.

Congress must find a way to fix the budget deal’s Medicare Part D gift to insurers before the BBA provision is allowed to take effect.


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