The budget sequestration has taken effect and in the next few weeks it will push President Obama and Congress into another haggle over government spending. The President will likely continue to support and push his plan that he made reference to in his 2013 state-of-the-union speech: to raid the Medicare prescription drug benefit program. The President’s plan would require pharmaceutical manufactures to offer rebates on drugs for people that are “dual eligible” for Medicaid and Medicare and receive drug benefits through Medicare’s Part D drug program.
The Medicare Part D rebate proposal will not only raise costs for seniors but will deny them access to drugs they need. Currently, the more than 37 million seniors enrolled in Part D are able to choose from an array of plans that best meet their budget and medical needs. Private insurance plans compete with one another offering varying drug coverage, deductibles, and premiums, and the feds subsidize the premiums. Market competition between the plans vying for seniors’ attention will keep premium cost low translating into less taxpayer money being used for subsidies.
The President’s proposal would require pharmaceutical companies to rebate some of the money they make on drug sales to “dual eligibles.” The former Congressional Budget Office Director Douglas Holtz-Eakin has stated the “rebates” will force Part D premiums up by as much as forty-percent and drug companies will try to recover the cost of those forced rebates from somewhere. That somewhere will be seniors’ pockets.
In response to the President’s plan a coalition of conservative and free-market organizations have written a letter to Congress urging them to oppose Medicare Part D Rebates. The letter argues that,
“This is not a ‘rebate’ in any true sense of the word. Rather, this is an attempt to force drug makers to sell to insurance companies at a loss, as the government does with the poorly-performing Medicaid program. Government forcing companies to turn money over to the Treasury is not a rebate, it’s a tax.”
This rebate is essentially a tax hike that will only go to fund more reckless spending by the Obama administration.