- “Democrats claim the government could save as much as $190 billion over the next 10 years if it negotiated [prescription drug prices] directly. Those savings could help shrink the ‘doughnut hole,’ the gap in Part D coverage that forces many beneficiaries to pay about $3,000 a year for drugs, said Brendan Daly, a spokesman for Nancy Pelosi, the Democratic leader in the House.”
New York Times, Nov. 6, 2006
“Supporters said the government could save $96 billion over 10 years by negotiating for drugs bought in bulk. . . . “It will deliver lower premiums to the seniors, lower prices at the pharmacy, and savings for all taxpayers,” House Energy and Commerce Committee Chairman John Dingell, a Michigan Democrat, said on the House floor today.”
Bloomberg News, Jan. 12, 2007
“Research by respected economist Dean Baker shows that the federal government and Medicare beneficiaries would save $600 billion between 2006 and 2013 if Medicare were allowed to directly offer a Part D benefit and to negotiate prices with pharmaceutical manufacturers. Such significant savings could be used to close Part D’s donut hole and to lower cost-sharing for Medicare beneficiaries.”
National Center to Preserve Social Security and Medicare
Most of the discussion surrounding the Democrats’ efforts to change the Medicare Part D drug benefit’s “non-interference clause”—which prohibits the federal government from negotiating the prices on prescription drugs—focused on whether the government could do a better job than the private sector, not on the future tax implications.
Democrats asserted:
- Requiring the government to negotiate the prices would save billions of dollars—although the precise figure, as you can see from the above statements, has been a bit hard to nail down.
- And, that those savings could be used to close the “donut hole,” giving seniors more comprehensive coverage—without having to find additional revenues.
Unfortunately, the budget claims of Reps. Nancy Pelosi, John Dingell, and “respected economist” Dean Baker don’t amount to a hill of pills when it comes to the budget.
That responsibility falls to the Congressional Budget Office, which must “score” such bills by providing the official estimate of how much money they cost or save the federal government.
And the CBO estimated last week that eliminating the non-interference clause would have a “negligible” effect. In other words, no savings. So the Democrats can no longer claim they will use those savings to expand the program.
See, they wanted to say they “improved” the drug benefit, and they didn’t want to have to take any money from other programs in order to fund the expansion—made even more difficult under their version of the “paygo” rules.
So it looks like either one more promise will be broken, or one more tax hike is in the offing—or both.