Dear Chuck Todd: Read this from Ezra Klein and you'll know how to question Santorum on Part D

[flpoljunkie]

You did know that Medicare Part D was a giveaway to the pharmaceutical companies. I'll give you that. But you really need to do some homework--like many of your media peers who also seem unarmed with the knowledge to stand up to Republican distortion and inventions.

Responding to Ryan
By Ezra Klein

”Our premium-support plan is modeled after the Medicare Part D prescription-drug program,” Ryan writes, “in which providers compete against each other for seniors’ business. Medicare Part D came in 40 percent below cost projections done at the time of enactment — that’s almost unheard of for a government program.”

”Medicare Part D” is wonk-talk for the Medicare Prescription Drug Benefit. Signed into law in 2003, Medicare Part D has been cheaper than originally estimated. But it hasn’t been cheap enough to make Ryan’s plan work, and nor is Ryan’s plan as closely related to Part D as he suggests.

Let’s start with the costs. Since 2006 — the first year of the benefit — Medicare Part D’s average premium has risen by 57 percent (pdf). Between 2010 and 2011, premiums rose by 10 percent. And going forward, the program’s actuaries expect (pdf) expenditures “to grow at an average annual rate of 9.7 percent for the 10-year period 2011 to 2020.” That may be an excellent performance when compared with the Congressional Budget Office’s initial projections. But it’s a lot faster than inflation, which is what Ryan needs for his plan to work.

Moreover, Part D’s performance vis-a-vis the early projections has had less to do with the program itself and more to do with sectorwide trends in the pharmaceuticals market, where older drugs are slipping out of patent and the development of new drugs has slowed. As the actuaries write, “The reduced estimates reflect a higher market penetration of generic drugs and a decline in the number of new drug products that are expected to reach the market during this period.” That’s why the drug savings haven’t been limited to Medicare: National drug spending is 35 percent lower (pdf) than projected in 2006. Medicare Part D is part of, rather than the driver of, that trend. And that trend, of course, is a bad one: it’s lower costs through less innovation, which isn’t want Ryan wants and isn’t what I want.

Another reason that the program’s costs came in lower than expected is that fewer people signed up. The Congressional Budget Office estimated that 93 percent of Medicare enrollees would participate. Instead, 77 percent did. That meant costs were lower than projected, but not because the program was more effective than we thought it would be.

Finally, if you look at them closely, Ryan’s plan and Part D don’t look all that similar. For one thing, Part D only covers drugs, while Ryan’s plan covers all health-care services. It’s not at all clear how applicable the Part D experience is to, say, hospital insurance. But the bigger issue is that Ryan’s plan is capped while Medicare Part D isn’t. In Part D, the federal government pays, on average, 74 percent of program’s costs. And that support grows alongside the program’s costs. Ryan’s plan covers about a third of beneficiary costs, and that support grows at the rate of inflation — so much more slowly than the rest of the program, or than Medicare Part D. This has always been the main criticism of Ryan’s plan, and Medicare Part D’s structure shows what a radical decision he made to structure it like that.

http://www.washingtonpost.com/blogs/ezra-klein/post/responding-to-ryan/2011/05/19/AGZVStCH_blog.html