By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – This whole Medicare drug benefit thing is complicated. But like any good song sung in a different language, I might not understand all the words - but the feeling come across loud and clear. This is not going to be good for recipients. I'm Maxine Shapiro with KERA Marketplace Midday.
Bear with me here, because I'm really going to try to simplify something that is not very simple. The whole premise behind President Bush's Medicare drug plan is to privatize prescription drug coverage. Instead of the government offering drug benefits, the coverage would be provided, for the most part, through private insurers - a more market-based alternative. The idea is that competition among insurers would make for lower prices. And in those areas that didn't have at least two private plans, the government would offer a "fallback" drug benefit.
Now get your darts ready, Libertarians, because I don't see how this free-for-all in the marketplace is going to help anyone but the insurance and drug companies. It boils down to supply and demand. When the demand is greater and the supply is smaller prices go up. As much good as the pharmaceuticals do, they are not non-profit. Nor should they be. Of course, a little decrease in the profit margins would kill 'em.
Consumer advocates like the Alliance for Retired Americans and Consumers Union, nonprofit publisher of Consumer Reports, are standing against the current proposal. CU went as far as figuring out what the average Medicare beneficiary would have to pay out-of-pocket in 2007. That would be one year after the change, should it be implemented. Their figures show "despite the new prescription drug benefit," the cost would be higher (using 2003 real dollars) for Medicare beneficiaries.
Some groups would rather see defeat than an unsound bill. But - and this is huge - the Kaiser Family Foundation, found, should there be no change at all, that by 2006 some 20% of seniors would face "total drug expenditures" of $5,000.
Maybe we ought to really look at the price of prescription drugs. By the way, Pfizer has surpassed Microsoft as the second-largest corporation in the world. For KERA Marketplace Midday, I'm Maxine Shapiro.
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