Democrats to Push for Medicare Changes

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When the new Democratic-controlled Congress convenes this month, one of its first actions will be to try to give the government power to negotiate prices for Medicare's new prescription-drug benefit. But while the public strongly supports such a change, President Bush is likely to veto it. Budget officials say government negotiation won't save money, anyway.

MELISSA BLOCK, host:

Okay, Ron. Don't go away. We're going to come back to you in a moment but first we're going to have a report on that Medicare plan from NPR's Julie Rovner.

JULIE ROVNER: Right now prices for drugs for Medicare patients are negotiated by private companies. The government can't participate. That's the way the Republican Congress set it up when it passed the Medicare law in 2003. But that infuriated Democrats like Illinois Congressman Rahm Emmanuel. He helped lead the successful efforts for Democrats to take back the House this fall. He says making the Medicare change part of the party's platform was no accident.

Representative RAHM EMMANUEL (Democrat, Illinois): Democrats made a pledge that if we got to Congress we were going to take the language that the pharmaceutical companies got, strike that language, rip it out and then specifically tell the secretary to begin negotiating prices with the pharmaceutical companies so we can get a better price both for the seniors and the taxpayers.

ROSEN: Emmanuel says allowing the government rather than individual insurance companies to negotiate with drug makers is simply common sense.

Representative EMMANUEL: That's the business model of Wal-Mart. That's the business model of Costco. That's the business model of Target. Big purchasers get better pricing because when you buy in bulk you can negotiate a better price.

ROSEN: Most of the public apparently agrees. Mollyann Brody is Vice President for Public Opinion and Media Research for the Kaiser Family Foundation. According to a nationwide survey taken last month by the foundation and the Harvard School for Public Health:

Ms. MOLLYANN BRODY (Kaiser Family Foundation): About 85 percent of the public overall favors allowing the government to negotiate with drug companies to get lower prices for Medicare prescription drugs. That includes three-quarters of Republicans, nine in 10 Democrats and more than eight in 10 independents. So clearly this is something that across the board is just something that makes sense to people.

ROSEN: But it doesn't make sense to Joe Antos. He's a health economist with the American Enterprise Institute and a former analyst with the Congressional Budget Office.

Mr. JOE ANTOS (American Enterprise Institute): Price negotiation by the government for prescription drugs is a great sound bite but it's not a good policy and it basically won't work.

ROSEN: Both the CBO and the Bush administration's budget office have said they don't think government price negotiations would save much money. Antos says that's because while in a real market a bigger purchaser gets a better price, Medicare isn't a real market.

Mr. ANTOS: The problem with the government is that it is not prepared to step away from the table. That's the essence of price negotiation. Two sides across the table wanting to either get the business or sell to that customer but being fully prepared to walk away if the deal isn't right. The government cannot walk away.

ROSEN: Why not?

Mr. ANTOS: How many votes are there in the Medicare population?

ROSEN: Around 43 million and if the government drives too hard a bargain and ends up not covering an important drug it will make those seniors and the lawmakers who represent them very angry. Antos also said the government lacks both the money and the expertise to negotiate for every version of every drug sold in America.

Mr. ANTOS: By the way, where is that expertise? It is in those drug plans that participate in the Medicare program.

ROSEN: The companies that are doing the negotiating now. Then there's the Bush administration. While no one has said out loud that the president would veto a bill that calls for government negotiation, officials have made it pretty clear that's the likely outcome. Here's how Health and Human Services Secretary Mike Leavitt put it in a meeting with reporters.

Secretary MIKE LEAVITT (Secretary, U.S. Department of Health and Human Services): At the very heart of this is a competitive marketplace and it's working. The only way to negotiate drug prices is to negotiate a formulary.

ROSEN: That's the list of covered drugs.

Secretary LEAVITT: We believe very clearly that consumers make better decisions about their healthcare and what formularies they should choose than the government.

ROSEN: But with Medicare such a potent political issue, a veto may be just the prescription Democrats are looking for.

Julie Rovner, NPR News, Washington.

BLOCK: And we're joined again by our senior Washington editor, Ron Elving. Ron, we were talking before about what will be happening in the early days of the new year in the House. What about on the Senate side?

RON ELVING: The senators haven't made one of those 100-hour vows and they may or may not take up some of the things that the House wants to do. For example, they could do minimum wage in short order if they wanted to and if they had an agreement but that's going to be at their discretion.

The Senate is going to be more preoccupied with Iraq. Senator Joe Biden is going to launch extensive hearings on this next week and there's a lot of resistance to the idea of a surge, that is, sending 20,000, 30,000 more American troops to Iraq and that resistance is among Republicans as well as Democrats.

BLOCK: And we should be hearing at some point soon from the president on his plan for Iraq. When might that happen?

ELVING: It could happen at any time but it's not clear when it's going to happen. The White House has been very cagy about when this speech is going to take place, when we're going to hear from the president what his new direction in Iraq is.

We heard it was going to be before the end of the year then just shortly after the new year and now it's some time in January. It could go as far as the State of the Union, which is three weeks from tomorrow night on January 23.

BLOCK: Okay. NPR's senior Washington editor Ron Elving. Ron, thanks very much.

ELVING: Happy New Year, Melissa.

BLOCK: Same to you.

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