By Lambert Strether of Corrente
This post — inspired by this Times article on Medicare Part D (non-paywalled duplicate) — is or was going to be my first foray into actual Medicare, as opposed to #MedicareForAll. I say “was” because in fact my foray failed, as I recoiled in horror when I tried to understand the system. WikiPedia:
Medicare is further divided into parts A and B—Medicare Part A covers hospital (inpatient, formally admitted only), skilled nursing (only after being formally admitted for three days and not for custodial care), and hospice services; Part B covers outpatient services including some providers services while inpatient at a hospital. Part D covers self-administered prescription drugs. Part C is an alternative called Managed Medicare by the Trustees that allows patients to choose plans with at least the same benefits as Parts A and B (but most often more), often the benefits of Part D, and always an annual out of pocket spend limit which A and B lack; the beneficiary must enroll in Parts A and B first before signing up for Part C.
Four parts is three parts too many. It’s clear at the outset that Medicare has a serious neoliberal infestation problem, since complex eligibility determination — we call it “shopping” — is the hallmark of the neoliberal approach to the provision of services. (That’s why “free at the point of care” is essential to any #MedicareForAll program; it’s the only way to blow away the eligibility system, along with its gatekeepers and rent-seekers.) Clearly, doping out what my Medicare coverage should be will be a large, even enormous, tax on my time, and I don’t want to pay that tax just now.
So, a change of course (and a shorter post). First, I’ll provide a brief potted history of Medicare Part D; then I’ll look at the the issues that the Times raises; then — as a #MedicareForAll supporter — I’ll explain why Medicare Part D shouldn’t exist in the first place; and finally I’ll open the floor for readers to share their own experiences.
Medicare Part D was passed by the Bush administration in 2003, and is essentially a public-private partnership. It went into effect on January 1, 2006. From The Commmonwealth Fund in July 1, 2006:
Medicare Part D: A Successful Public–Private Partnership
Six years ago, millions of elderly Americans, most of them living on fixed incomes, had few ways to contend with the rising cost of prescription drugs other than to delay getting their prescriptions filled, take fewer pills than prescribed, or save on other expenses by such dire strategies as skipping meals. The problem was clear and the nation resolved to embark on the most ambitious public-private partnership since Medicare was adopted 40 years ago.
For the benefit to succeed, it would demand unprecedented collaboration within the health care community and . In 2003, Congress passed the Medicare Modernization Act, challenging the marketplace to bring affordable prescription drugs—and peace of mind—to elderly Americans like Barbara Stetson, an 81-year-old Maine resident who has had three strokes and takes nine medications. She had been “frantic,” she says, unable to afford her medications and depressed by the fear that she had become a burden to her children by living too long—a tragic and all too typical situation.
[T]he new program is working well. Barbara Stetson and millions of people like her are no longer frantic. They have affordable drug coverage at long last.
What happened? The short answer is that both the private and the public partners have taken their responsibilities seriously and have worked exceptionally hard, cooperatively, and effectively to meet and overcome the inevitable problems accompanying the most significant strengthening of the Medicare program since its enactment in 1965.
(Anything that nudges Medicare toward privatization doesn’t “strengthen” it, but never mind that for now.) Fast forward twelve years, and there are… some snags. From the New York Times, the story I mentioned at the beginning:
The Large Hidden Costs of Medicare’s Prescription Drug Program
As a sidebar, the deck:
Premiums have risen very little in the years since Medicare Part D was introduced. But the same cannot be said of the burden on taxpayers.
Drug benefits are entirely provided by private insurance plans, with generous government subsidies. There are lots of plans to choose from. It’s a wildly popular voluntary program, with 73 percent of Medicare beneficiaries participating. .
[But] in 2007, Part D cost taxpayers [no, it didn’t] $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase. It’s a surprising statistic for a program that is often praised for establishing a competitive insurance market that keeps costs low, and that is singled out as an example of the good that can come from strong competition in a private market.
Much of this increase is a result of growing enrollment — it has doubled in the past decade to 43 million — and [and why, one might wonder, are they so high?]. But there is also a subtle way in which the program’s structure promotes cost growth.
So, “subtle” is the story; cf. Thomas Frank on how the professional classes love complexity for its own sake. Back to the Times:
When enrollees’ drug costs are relatively low, plans pay a large share, typically about 75 percent. But when enrollees’ drug spending surpasses a certain catastrophic threshold — set at $5,000 in out-of-pocket spending in 2018 — 80 percent of drug costs shifts to a government program called reinsurance. This gives people in charge of private insurance plans an incentive to find ways to push enrollees into the catastrophic range, shifting the vast majority of drug costs off their books. For example, they could be less motivated to negotiate for lower drug prices for certain types of drugs if doing so would tend to keep more enrollees out of the catastrophic range.
Reinsurance spending, which is not reflected in premiums, has been rising rapidly.
The Affordable Care Act hastened this growth. The law requires pharmaceutical manufacturers to pay some of the cost of the drug benefit. (The Bipartisan Budget Act of 2018 further increased how much manufacturers must contribute.) For the purposes of reaching the catastrophic threshold and triggering reinsurance, these industry contributions count as out-of-pocket payments for enrollees, even though they are not.
That means enrollees don’t have to spend as much as they otherwise would to trigger the reinsurance program. Although this is of great benefit to enrollees, it also pushes up taxpayer liability [no, it doesn’t] for the program.
Changing the extent to which manufacturer’s contributions count as enrollee out-of-pocket spending is one potential reform of the program. Other solutions include increasing the liability of insurance company plans in the catastrophic range and decreasing the liability of taxpayers.
This would have the effect of bringing premiums more in line with program spending. Doing so would “return Part D to the market-based program it was intended to be,” [Jeah Jung of Penn State University]. As it stands, there is a substantial divide between what Part D was billed as and what it actually is.
Two fun facts, neither mentioned by the Times: (1) the legislation enabling Medicare Part D forbids the Federal government from using its bargaining power to decrease the price of pharmaceuticals; and (2) the high and rising price of pharmaceuticals is largely due to Big Pharma’s monopoly power. With these two facts in mind, let’s reformulate the Times’s prose in simpler terms:
(1) Medicare Part D, through a familiar “shopping” experience, has fixed drug prices at a low level for years. Hence “consumers” love it.
(2) Medicare Part D enables drug manufacturers to pass on monopoly prices to the Federal Government, which cannot bargain them down. Hence Big Pharma loves it.
(3) Big Pharma has also figured out a way to game Medicare Part D’s complex eligibility requirements (“reinsurance”), making their profits even more grotesquely ginormous than they already are.
(4) Point #3 is what the Times thinks is the scandal, and not point #2, let alone #1 (neoliberalism’s quasi-religious belief in “shopping”).
(5) A system where the price of a product to consumers is regulated by the government, yet the where the cost of the product to the government cannot be regulated, is considered by economists to be “market-based” by “intent.”
Well, my head hurts. So at this point, I’ll appeal to you, readers to help me out with my foray into Medicare by sharing your own experiences. After all, things may not be as bad as I think! Millions depend on it, after all.
 I’m incentivized on Medicare, since I’ve been “going naked” ever since the Crash — before that, employer-based health insurance was actually a thing for me, a routine thing — and in the near- to medium-term future I’ve got to figure out what to do about this, given whatever Medicare’s monthly costs might turn out to be, per this laughingly named “Medicare 2018 costs at a glance” page at Medicare.gov. It could be that it’s better just to put the money in the bank, and go the medical arbitrage route when or if the time comes. (There is also the question of whether I want to enter our brutal and horrid health care system in the first place; I’d rather die in a ditch in the tropics than be stuck in a bed in a nursing home, in front of a TV I can’t turn off.) You’d think there would be a simpler way.
 At the time, there was a good deal of whinging about mean Republicans (Kos; Rep. Louise Slaughter), but, as usual, there were enough Democrat votes to pass it in the Senate: Max Baucus, John Breaux, Thomas Carper, Kent Conrad, Byron Dorgan, Dianne Feinstein, Mary Landrieu, Blanche Lincoln, Zell Miller, Ben Nelson, and Ron Wyden. Why, some of them of them still Senators today! Although not Max Baucus, who readers will remember had protesters arrested in his hearing room; they were protesting his exclusion of any single payer advocates from his panel.
 We don’t seem to hear triumphalist rhetoric like “the nation resolved” any more, oddly, or not.
 I ran a search on “Barbara Stetson” in Maine, and came up with testimony from a “Barbara Stetson” in this interesting article on a Maine program for preventing falls, which Stetson attended, called “A Matter of Balance.” Buried at the very, very bottom left of the page is — hold onto your hats, here, folks — the fee: $20. Sounds small, but then again, that’s 20 cans of cat food at Dollar Tree. You could eat for practically a month on that! “Free at the point of care” really is important.