1. lower the cost that individuals pay for drugs

and

2. lower the cost that the Treasury pays for Part D.


From the 2012 Medicare Trustee report, Part D total cost is $67.1 Billion.

Even a modest 10% savings would result in a $6.7 Billion savings...

I am talking about individuals not on Medicare, who either don't have insurance or whose insurance does not cover a drug and thus have to pay out of pocket.

My concern is that those people, and to a lesser extent private insurance companies, will end up paying more for drugs because they lack the purchasing power of Medicare and thus drug companies will charge them more in order to compensate for the lower profit on selling to Medicare.

I know that when we had high deductible insurance when I was younger, my mom would pay over $100 for a doctor's visit, when the doctor would get $30 from an insurance company for the same visit. No doubt the doctors charged people paying out of pocket more to compensate for lower rates from Medicare and HMO's.

I am concerned about a similar effect on drug prices if Medicare is allowed to set the prices it pays, because the last thing we want is for individuals who lack adequate prescription coverage and are struggling to afford their medications pay more. Even a cost shift to private insurance companies would be undesirable, as it would undoubtedly drive up premiums.

I am hoping to find some empirical data on this, but thus far have been unsuccessful. If no such data exists I will simply recommend that Medicare be allowed to negotiate prices with the caveat that policymakers should consider the impact such a move might have on drug prices outside of Medicare.

Now on to your point...

First, we must change the Part D law to allow negotiated drug prices. It is
disgusting to give the drug companies this freebe. And as a government entity,
we *must* change the law.

Second, any consequences of price gouging by the drug companies should be met with
legislation. After all, health care is/should be a right and *nobody* should become bazillion-airs
of the illnesses and injuries of humans.

Medicare for All.

but gov't negotiates w providers for Federal Employees Health Benefits Plan, and the providers/insurers negotiate with drug companies and pharmacies. Not aware that this causes harm to either insurers or drug providers.

http://www.opm.gov/insure/health/

Good luck with your paper.

If such a thing shifts costs, who picks up that tab? Maybe these costs are encumbered by governments that are too stupid and/or corrupt to allow such negotiation.

The gov't already does it with the VA. When Bush pushed for MEDICARE Part D it was written into the law that the gov't was not allowed to negotiate lower prices for bulk purchases of drugs.

It was a giveaway to BIG Pharma disguised as a social program

As a retired health care provider who accepted Medicare payments, I can tell you the Medicare is a major force controlling pricing in health care. Medicare establishes what is "usual and customary" (it varies regionally), and insurance companies often follow that lead in determining what is "usual and customary" in what they pay. So, no, the drug companies would not simply charge more to private insurance.

I have found that most people don't realize that Medicare not only helps older folks meet medical expenses but is also a major force controlling prices in many areas of health care. Consequently, I am ALWAYS in favor of Medicare negotiating and setting prices. Some fear that it will reduce quality of service and products, but I think that in most cases it just reduces profit margins, and in the case of some health care facilities, provices for their financial survival (e.g., hospitals in rural areas).

But just so you know, the one place, beside pharmaceuticals, where Medicare has had insufficient sway is durable medical goods, which is why you see so many ads on TV for scooters for older folks that are paid for by Medicare (just to name a single example). Durable medical goods often are costly, because of the need to have sufficient liability coverage (I once designed a scale for weighing folks at home in wheelchairs that would I could sell for as little as $100 each, compared to around $1500-$3000 for those used in medical facilities, but found I would have to pay $300 each for liability coverage, so I gave it up). But even with liability coverage as part of the expense, the mark up is often at least 100%.

Very helpful.

I have another, related question for you: given the downward pressure on price set by Medicare and HMO's, were you forced to charge more to those paying out of pocket than you otherwise would if you could charge everyone the same amount?

In my first draft to my reply above, I stated that my personal, professional ethic was to provide services at the low end of the scale, so I mostly did not charge more than insurance and/or Medicare paid, but I decided that was more information than necessary, so I cut it. There were some exceptions, but not many.

That was my choice. I know of others who did compensate by charging what the market would bear, so in cases of out-of-pocket they would charge more if the patient could pay. Again, I didn't do that. IOW, I wasn't all that much of an entrepreneur and turned down opportunities to be one. Understand I am not opposed to capitalism, nor entrepreneurship, but I was mostly self-employed (toward the end of my career I did take an academic position at a local university) and I did preferred that.

But, I can tell you that people without insurance, paying out of pocket pay a LOT more for prescription drugs. For example, my thyroid medicine is $162.00 for 120 pills. The price with insurance would have been $42.00 for the same prescription.

I take 5 of these pills a day.

I am concerned that in order to preserve their profits if Medicare Part D were allowed to negotiate cheaper prices, the drug companies would charge people like you even more since individuals don't have the same kind of negotiating power.

It doesn't seem that anyone has really studied or considered that possibility.

we pay the highest price for any medical care.

A few hours in the ER after Thanksgiving cost me $15,000.00. Add thousands more to that for 3 days in the hospital.

I hope you are okay medically at least, if not financially.

Will you be able to get coverage when Obamacare goes into effect?

But not before 2014.

Since I'm now stuck with the preexisting label, I qualify for that part of the Obama Healthcare, but at $533.00/month, I can't afford it. That would be 1/3 of my monthly income.