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Bad Ideas for Gov’t in Health Care

Updated: Aug 28, 2019

You have to be concerned over the “inflationary penalty” proposed as a means of reducing drug prices in Medicare Part D. Well, you do if you care about property rights.


There should be no doubt that, just as government price controls through “binding arbitration” and reference pricing to countries with socialized medical systems and attacking pharma patents are among quite a number of bad ideas, so too is Sen. Ron Wyden’s inflationary penalty proposal a bad idea. Conservatives agree with Sen. Pat Roberts that the inflationary penalty is “the first step toward government rate controls on drug prices” and not “a good answer.”


The problem with such proposals is they use the heavy hand of government to dictate prices to the private sector. The inflationary cap is a government-imposed penalty for drugs in Part D that happen to have price increases above inflation. We know that government price controls lead to less innovation, fewer market players, rationing and shortages.


This is the wrong way to lower drug costs. These bad ideas assault private property rights and, in the process, threaten Medicare beneficiaries with reduced consumer choice and market competition.


Medicare Advantage and Medicare Part D by design inject choice and competition into Medicare. Little wonder that both these parts of Medicare cost the program less than CBO projected, they provide seniors with real choices, they have enjoyed significant uptake, and seniors give them high marks. The Medicare Today 2018 Senior Satisfaction Survey found nearly 85 percent of seniors satisfied with their Part D coverage and 81 percent regards their drug plan a good value.


Washington should pursue market-oriented solutions that will provide transparency and lower costs in Medicare Part D by boosting private-sector innovation, participation, and flexibility to respond to seniors’ preferences.

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