Ronald Reagan said the nine scariest words in the English language are “I’m from the government and I’m here to help.” That may be truer today then the day he first said it.
President Obama is from the government and says he is here to help with prescription drug prices. In his 2017 $4.1 trillion budget proposal, the Obama administration once again proposed allowing Medicare to negotiate drug prices in its enormously popular Part D drug benefit program. And with the government’s multibillion dollar buying power, any “negotiation” would essentially allow the government to set drug prices. In other words, it’s a price control.
Democrats Hillary Clinton and Bernie Sanders have enthusiastically endorsed this measure. Perhaps unsurprisingly, so has Donald Trump. Clinton, Sanders, and Trump have all talked in terms of negotiating lower prices and saving money for seniors. In an insult to basic math, Trump claims his particular proposal will somehow save $300 billion a year from a program that the Congressional Budget Office estimates will cost $88 billion this fiscal year. Clinton, and Sanders are equally misleading, because allowing Medicare to negotiate drug prices won’t save a dime.
CNN recently reported that even the Obama Administration estimates no savings from its proposal.
“While that sounds like a logical way to save money, most experts who have looked at the issue say it might not. The Congressional Budget Office has said that lifting the ban on negotiation “would have a negligible effect” on cost because the federal government would be unlikely to obtain significantly lower prices than private drug benefit providers. Even the Obama administration, which proposed allowing Medicare to negotiate for very high-cost drugs as part of its fiscal 2017 budget, estimates no savings from the provision.”
I repeat, the Obama administration proposal “allowing Medicare to negotiate for very high-cost drugs as part of its fiscal 2017 budget, estimates NO savings from the provision.”
It would provide zero savings, but what would the administration’s proposal do?
Sally Pipes of the Pacific Research Institute recently wrote what the proposal would do:
“It will instead raise costs for seniors, deny them access to drugs, and dismantle the only portion of Medicare that has cost less than government projections.”
With no savings to the taxpayer, you may be wondering why Obama is advocating changes in a program that has historically high satisfaction rates that regularly comes in billions under budget. You may be wondering why Clinton, Sanders, and Trump are pushing price controls that would limit access to drugs, lead to rationing, stunt the development of new cures, and destroy the most free market aspect of Medicare.
Just remember, they’re from the government and they’re here to help.