Loren Adler and Adam Rosenberg write,
Despite constituting barely more than 10 percent of Medicare spending, our analysis shows that Part D has accounted for over 60 percent of the slowdown in Medicare benefits since 2011 (beyond the sequestration contained in the 2011 Budget Control Act).
So, it was not so much Obamacare that slowed the growth in Medicare spending. It was the market-oriented and much-reviled prescription drug plan enacted under President Bush.
Well, at least the claim that the ACA (whose mandates, when not deferred, started in 2014) could affect future costs does not violate temporal mechanics; unlike the other claim you hear, that it HAS bent a cost curve (in this case general spending on health care) that began to bend in the early 2000’s.
This sounds unintuitive, but it is not really surprising. Drugs are almost invariably cheaper than the alternatives, such as hospitalization, surgery, or death. So if Part D made drugs cheaper for the consumer and therefore induced the marginal patient to use more drugs and fewer more expensive options already insured under Medicare, then Medicare as a whole sees savings.
None of this excuses the further subsidization of the wealthiest age cohort through Medicare. But it is very believable that insuring more spending on drugs means spending less on everything else. It is, after all, what private insurance does. And it is, after all, what individuals who have to pay for their own health care do. When drugs are available and they are the better option, they are also the cheaper option.
@Mike P
“None of this excuses the **further** subsidization of the wealthiest age cohort through Medicare.”
Is this really “further” subsidization when by “spending” one dollar ($1.00) through that cohort the system reduces other “spending” through that cohort by one dollar and thirty eight cent ($1.38); OR, is it a re-direction of the “spending” that results in a thirty eight cents reduction in incurred costs?
Of course like every similar “program,” it is NOT for the “General Welfare,” but for a particular interest group (population segment), which is something quite different.
But, as long as those kinds of programs are being defended as “General Welfare,” rather than by particular interest, is any “excuse” required?
Thanks to W for turning new drug development into a failure. Fewer drugs under patent, less spending on them.
How much did Part D benefit from patent expiry? E.g., Lipitor….
Read the article. As they note, it is the absence of new drugs coming into the market and old drugs going off patent which caused the drop.
Steve