The Magazine

HillaryCare Comes Back

The disastrous Democratic Medicare drug plan.

Dec 25, 2006, Vol. 12, No. 15 • By ROBERT M. GOLDBERG
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Michael J. Fox made headlines for Democrats in the recent election campaign by promoting federal funding of embryonic stem cell research that the actor deems critical to finding a cure for Parkinson's Disease. Unbeknownst to him, his message was part of a massive bait-and-switch. That's because the Democrats also promised Medicare reforms that would have the effect of denying seniors access to new Parkinson drugs and of undermining investment in stem cell research--indeed, in all kinds of pharmaceutical research.

The Democrats' Medicare plan would allow the government to negotiate prices directly with drug companies. This, they argue, could cut prices enough for the government to pay for 100 percent of the prescription drug costs of every senior in America. The political appeal of this proposal is self-evident.

The Medicare legislation creating the prescription drug benefit that took effect in 2006 (known as Part D) prohibited the government from negotiating directly with drug or biotech companies in order to guard against price controls. Instead, pharmacy benefit managers--the same service organizations most health plans use--would negotiate drug prices, pay pharmacy claims, etc., while offering competing versions of the Part D benefit to seniors. Democrats and most policy experts predicted the new drug benefit would be confusing and unworkable, that seniors would fail to sign up, and that those who did would receive scant coverage as drug companies jacked up prices to cash in on sweetheart deals absent any government jawboning.

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