Proposals Will Raise Drug Prices for Millions of Middle-Class Seniors

(Washington, D.C.) The Council for Citizens Against Government Waste (CCAGW), as part of the Coalition Against Higher Medicare Drug Costs, today asked Congress to include cost containment provisions and competitive market reforms in the final version of the Prescription Drug and Medicare Improvement Act.  The Medicare Prescription Drug conference committee will soon meet to reconcile the differing House and Senate versions of prescription drug and Medicare reform legislation. 

CCAGW has identified five fundamental flaws that need major reworking from members of the conference committee: the lack of private insurance options that would bring Medicare close to the health care standard enjoyed by federal employees (including by members of Congress); universal prescription drug coverage instead of coverage aimed at the poor; the creation of a new bureaucracy, the Center for Medicare Choice; and add-ons that will benefit special interests.  Moreover, neither version of the bill addresses the rampant waste, fraud, and abuse in the current system.    

“Congress wants to add new benefits to a program without getting overall costs under control,” CCAGW Vice President of Policy David Williams said.  “The House and Senate versions currently on the table would do enormous damage to future generations.”

“One-third of retirees eligible for Medicare receive drug benefits through their former employer’s private systems,” Williams continued.  “The government’s promise of universal coverage will lead many employers to discontinue drug insurance, herding millions of unwilling seniors into Medicare’s mismanaged system.  Those seniors who are not dropped by their employers will pay higher premiums and co-payments.”

Seniors who get prescription-drug coverage from employers usually make a small co-payment with each drug purchase.  The Congressional Budget Office (CBO) estimates that 37 percent of seniors in this category will lose their benefit, leading to a 60 percent increase in out-of-pocket expenses.  Four million seniors could lose their coverage overnight. 

“Universal drug coverage hurts the very people it intends to benefit,” Williams continued.  “By falsely declaring that drugs are ‘free’ for everyone, drug use will rise sharply, and prices will skyrocket.  The increased costs will hit everyone.”

The program’s supporters on Capitol Hill have failed to explain how they intend to pay for the new benefit.  After only a week of additional analysis, the CBO revised its cost prediction for the program from $400 billion to around $430 billion.  With the federal government staring down a projected $450 billion deficit, the program will likely be financed by more borrowing.  Furthermore, the baby boomers’ retirement will double the size of the Medicare population.

“Politicians are leading us into a fool’s paradise,” Williams concluded.  “At a time when we should be offering more flexibility in our health care system, we are offering less.  Competition is what lowers prices.  Forcing millions of retirees into a one-size-fits-all Medicare system will guarantee rising health care costs for the foreseeable future and could trigger a day of reckoning if Medicare collapses under its own weight.”     

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.