Medicare Hot Air

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Medicare Hot Air
Can the Democrats' bill bring lower drug prices? Don't count on it.

January 17, 2007 , FactCheck.org

Summary
Democrats are overselling their Medicare prescription drug bill. They claim it will bring about big price cuts for medication while Medicare experts say it won't. Republicans have been equally misleading, describing the bill as a system of severe price controls, which it isn't.

The fact is that the bill would do little more than require the Secretary of Health and Human Services to talk to drug companies about granting discounts. It specifically denies him the bargaining leverage of paying only for some drugs and not others.

Analysis
Ever since Congress passed President Bush's new prescription drug benefit for Medicare recipients, Democrats have been attacking it as a giveaway to drug companies. In the 2006 House and Senate campaigns, several TV ads attacked GOP lawmakers for supporting a law that forbids the federal government from negotiating directly with drug companies for lower prices. Democrats promised they would repeal that ban.

Now Democrats are advancing such a bill, H.R. 4 , which passed the House last week by a vote of 255 to 170. Prospects in the Senate are unclear. Both sides are making vastly exaggerated claims about its likely effect, which independent experts describe as negligible.

During debate, its chief sponsor John Dingell of Michigan flatly predicted big savings:

Dingell: This legislation is simple and common sense. It will deliver lower premiums to the seniors, lower prices at the pharmacy and savings for all taxpayers . . . . I have confidence that Secretary [Mike] Leavitt can cut a good deal with the bargaining power of 43 million beneficiaries of Medicare behind him without restricting access to needed medicine.

And Republicans described the bill as giving the government power to set drug prices. Rep. Michael Burgess of Texas took the lead for Republicans:

Burgess: Under the guise of negotiation the Democrats propose to enact draconian price controls on pharmaceutical products.

Both sides are blowing hot air. A number of experts, including the Congressional Budget Office and the chief actuary of the Medicare system, say the bill won't bring the lower prices Democrats promise. And contrary to the Republican claim, the actual language of the bill grants no price-setting authority to federal officials.

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