How Changing Medicare Part D Will Hurt the Private Sector

In a recent blog post, Joe Trauger of the National Association of Manufacturers takes a look at how the proposed changes to Medicare Part D place additional financial burdens on the private sector.

As it currently stands, Medicare Part D is a great example of government "harnessing the efficiencies and strengths of our private sector." Companies have the freedom to negotiate prices of medications, tailor premiums, and compete for customers. This competition keeps medication costs low for Medicare Part D beneficiaries, which is a big part of why the program is both extremely efficient and widely popular.

However, the proposed changes to Part D upset this balance and increase the financial pressure on both companies and consumers. When companies are required to pay a "rebate" on Part D plans, they are forced "to reduce their current Part D discounts and possibly raise prices in other markets." In other words, Part D beneficiaries aren't the only ones who will be harmed by the Super Committee's plans: enrollees in employer-sponsored health plans may also see their premiums rise as the overall cost of the program increases.

Trauger concludes with a warning: "Policymakers need to be wary of seemingly simplistic proposals.... The rebate idea is fraught with unintended consequences and threatens to de-stabilize a program that is under budget and very popular."

Changing Medicare Part D would also intensify the economic pressures on the private sector, making it harder for companies to add jobs and compete effectively on a global scale. Medicare Part D is a strong, financially sound program, and the proposed changes would only undermine its effectiveness. Trauger's advice to the Super Committee? Quite simply, it's "Leave it alone."