Analysis: Medicare Part D has lessons for health reform

The Wall Street Journal: "Four years ago, the U.S. government offered subsidized prescription-drug insurance to 43 million elderly and disabled, the biggest expansion of government-backed health care in decades. Today, the program is working better than many expected."

One lesson could be for proposed health insurance exchanges. "Jonathan Gruber and Jason Abaluck of the Massachusetts Institute of Technology, with data on 2.7 million Part D enrollees, find that 70% could have chosen a lower-cost plan, and the typical enrollee could have saved about 25%. Consumers focused too much on premiums, not enough on out-of-pocket spending. It's a reminder that elaborate cost-sharing formulas don't guide consumers well if they're too complicated for consumers to understand."

Another lesson: allowing the private insurers to negotiate drug prices, rather than the government, led to an average price cut of 12%. "That strengthens the case for harnessing private insurers to restrain health costs, but doesn't mean drug prices couldn't be lower still. ... The Medicare prescription-drug benefit is costing taxpayers a lot, but less than expected. The Congressional Budget Office's original 10-year price tag was $640 billion over 10 years; it's now down by a third to $410 billion" (Wessel, 1/7).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.