Well, it's still New Year's Day and I see that someone is already breaking my resolutions (#10) for economic reporting. A New York Times article tells readers that the battle in Congress over the Medicare drug bill, "highlights the profound differences between Democrats and Republicans over the future of the nation�s health care system, the proper role of government and the role of private markets in securing the best value for the huge sums spent on health care." Hmmm, do members of Congress sit down and contemplate what their ideal vision of a health care system is, or do they get lobbyists calling them with threats and promises in order to get them to vote in certain ways? I would suspect the latter, but we could be polite and just note that some members of Congress (nearly all of whom were Republicans) chose to support a bill that meant higher profits for the insurance and pharmaceutical industries. Did they do this because of their political philosophy? Why not just leave that judgement for the readers? This isn't the only peculiarity in the article. The article also includes a comment from the Secretary of Health and Human Services in which he proclaims his inability to negotiate drug prices that are comparable to the prices negotiated by the governments of Canada and other wealthy countries (and the Veteran's Administration). The obvious follow-up question would be "why are you such a bad negotiator?" But to be more polite, the article could have just noted that other governments and the VA do negotiate much lower prices than what the private insurers in Medicare pay. The article also includes the bizarre statement that even if Medicare negotiates lower drug prices, it may not lead to lower preimums, commenting that the Democrats "could not immediately say how they would guarantee that result." Well, most people think that market competition would guarantee this result -- insurers that did not pass on the lower drug prices in lower premiums would be driven out of business. The article also does a bit of the old "he said, she said," when it could have provided some real information. It notes that the Democrats want to cut back payments to managed care plans in Medicare and then asserts that the Democrats "contend such plans are overpaid by about 10 percent. " Actaully, this is the assessment of the non-partisan Congressional Budget Office, which has found that Medicare pays more for people in managed care plans than in the traditional program. The Democrats think that these excess payments should stop while the Republicans argue that they should continue, but the existance of excess payments is not an invention of the Democrats.
--Dean Baker