Nancy Pelosi is tackling what Obamacare didn't, the high price of drugs in the US. It sounds good. But blandly supporting something that "sounds good" without honoring the long-time lesson of fools us once, shame on you, fool us twice shame on us, would be naïve, especially post-Obamacare.
So, with full knowledge of the cons of Obamacare, we consider Pelosi's recommendations as reported. We'll have to wait and see the full text of what is proposed.
WOULD THIS LEGISLATION APPLY TO EVERYONE?
It's reported that Pelosi will have Medicare and the government, negotiate prices for 250 of the MOST EXPENSIVE DRUGS, (though some are reporting 250 most common drugs, big difference), just like they do for Medicare and apply those discounts to PRIVATE INSURERS.
But, remember, Obamacare also boasted that it would curbing costs of health insurance for EVERYONE, (remember those savings of $2,500?) which obviously was a lie and a fail. The main problem was that Obamacare is an entitlement program that saves money for some, but by partnering with insurance company for those exchange plans, Obamacare left consumers of private insurance plans, employer plans hanging in the wind.
Worse, knowing that this would be the bargain, lawmakers made sure that they wouldn't be caught in the net and made it so that Congress is not bound by the law they passed for everyone else. By now you should know their Obamacare is not our Obamacare, and as a matter of fact their insurance benefits are superior to most private insurance plans. (See http://conoutofconsumer.blogspot.com/2018/10/congress-obamacare-is-obamacare-in-name.html)
So specifically this drug plan would have to apply to everyone, no exceptions. Also, the law would have to prohibit Congress from giving itself and other public employees pay raises to disguise the fact that the law really presents higher costs for other drugs not on the 250 drug hit list as pharmaceutical companies try to make up their "losses" from reasonably pricing 250 prescription drugs.
This is a HUGE RISK, because we've already experienced it…From insurance companies charging everyone outside of public insurance and its offerings, including Congress' health plans and Obamacare plans more to "make up for" the lower prices offered to these groups, to the bare minimum requirements of Obamacare health plans, free checkups and "essential" health services that insurance companies used to justify hiking up prices in terms of higher deductibles, higher copays, higher coinsurance and additional exclusions to "cover" these Obamacare mandates.
HOW WILL THIS LAW PREVENT PRECIPITOUS PRICE INCREASES IN ALL OTHER DRUGS NOT COVERED UNDER THE 250 DRUG LIST?
Pelosi proposes bringing US drug prices in line with prices charged to other countries with an international pricing index for those 250 drugs, and seriously taxing profits made by pharmaceutical companies that don't make a deal with the government, including a 65 percent tax on gross sales from such subject drugs.
Again this sounds great. But, again, Obamacare has lessons to share: Most importantly is that making medications on the LIST cheaper means that pharmaceutical companies will make other medicines even more unaffordable.
We saw this with Obamacare and its essential health benefits and free checkups, repeatedly used by insurers as a reason to raise the costs to consumers for needed medical services in the form of increased deductibles, increased copays, increased coinsurance payments. We also saw that limiting the cost of individual self-only coverage left room for insurance companies to price coverage for dependents in families out of reach creating the family glitch.
BEST for consumers would be an international price average matching mandate for all drugs, meaning that if a specific medication is covered at one price abroad, it cannot cost more in the US, or a certain percentage more, whether it's on the 250 drug list or not. Just like if we bring in an ad to a retailer with a price guarantee, we would be able to do the same for our prescriptions based on an international pricing list and the pharmaceutical company would have to match or pay a fine.
IS IT A SUFFICIENT PRICE CONTROL FOR THE GOVERNMENT TO PERMIT DRUG PRICE INCREASES UP TO THE RATE OF INFLATION?
Pelosi recommends that there would be limits on how fast drugs increase in price, prohibiting increases faster than inflation. This also sounds great. However, there is a caveat, inflation rate varies wildly. Take a look at a chart for inflation, eg https://www.usinflationcalculator.com/inflation/historical-inflation-rates/, leaving us susceptible to enormous jumps in costs year over year.
Further, currently, supposedly insurance company rate increases are "reviewed" by states and with great fanfare states often argue that they haven't approved everything insurers ask for, yet our insurance charges both for obtaining health insurance and using it keep going up.
The real issue is that the government is NOT typically a good negotiator of prices, it's merely a payer. Its shortfalls and over-spending are passed on through taxation or by reducing coverage, just like insurance company payers. Even when Obamacare wanted to boast on how it was saving government money, it only saved money by reducing benefits to beneficiaries and didn't discuss the increased costs in government salaries and infrastructure or to other programs because of Obamacare as revealed by the Obama Administration in 2015 where the CBO stated, "Those estimates address only the insurance coverage provisions of the ACA and do not reflect all of the act’s budgetary effects," https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/49892/49892-breakout-AppendixB.pdf.
Therefore, instead of negating the benefits of the international pricing list and leaving increases in drug prices up to an inflation standard or heaven forbid, government "negotiation," why not simply mandate that all drugs get a price match based on that international pricing list? This would better protect consumers.
IS AN OUT OF POCKET MAXIMUM OF $2,000 to $3,100 MEANINGFUL FOR MEDICARE RECIPIENTS, AND WHAT ABOUT EVERYONE ELSE?
Pelosi also recommends a cap on how much is paid for prescription drugs from what I've read in a range of $2,000 to $3,100 for Medicare beneficiaries. Remember, basic Medicare has NO OUT OF POCKET MAXIMUMS, NO LIMITS ON WHAT BENEFICIARIES PAY, and most non-Medicare insurers go along with the ever-increasing government-established out of pocket maximums for "covered" services, which this year are $7,900 for an individual and $15,800 for a family. Add another couple of thousand dollars or more to those already unconscionably high numbers and the out of pocket maximum becomes out of reach and an imaginary relief and-or protection for Medicare beneficiaries and others.
The out of pocket maximum approach has already failed, first because government is not a negotiator and that number has increased year over year over year. Second, because government caps are ALWAYS met with insurers cutting their coverage, so that likely formularies, those lists of covered medications will continue to shrink in response to such a cap.
Therefore, what consumers require is an absolute cap of $X for medications, which would apply to everyone and after that needed medication is covered at X percent up to 100 percent. Nobody should be punished financially for illness, NOBODY.
WHY AREN'T SAVINGS BEING PUT BACK INTO THE GOVERNMENT PROGRAMS THAT SAVE MONEY TO BE USED BY THOSE PROGRAMS FOR THE NEXT YEAR?
The reinvest "savings" provision is the most mysterious, being reported as the proposed source of taking those "savings" and funneling the money to the NIH for apparently R&D. One of the biggest problems with Social Security and other zero balance programs is that every year if there's excess in those accounts, the government has the power to drain that excess and use it somewhere else. This is the zero balance provision. Pelosi is suggesting that "savings" on prescriptions, instead of going back into the programs that save the money be diverted to the NIH for research. NOT good for consumers.
Though research and development of new and better drugs currently receives government funding, therefore taxpayer funding, it is also significantly funded through philanthropic organizations, and the pharmaceutical companies themselves or venture capitalists. In the case of the pharmaceutical companies and the venture capitalists, the PATENTS that result benefit ONLY those companies. R&D should NOT be paid for by taxpayers whose ability to have access to new discoveries is limited by their ability to pay the patent protected prices. Those getting the financial benefit should pay for it. That's not consumers.
Until we see the exact text of Pelosi's proposal, it can't be thoroughly assessed, but while interesting, the proposal appears to have many of the same defects as Obamacare, and we were already fooled once on that one.
