A counter to claims that extending Medicaid drug rebates would help reduce deficit

Politico Pro: Study: Drug Rebates Would Drive Costs Up
Rep. Henry Waxman and Sen. Jay Rockefeller have introduced legislation that would extend Medicaid rebates to "dual eligibles" and those who qualify for the low-income subsidy program — a plan they say could reduce the deficit by $112 billion over the next ten years. But there's no such thing as a free lunch, said American Action Forum President and former CBO Director Douglas Holtz-Eakin, who is out with a new report Thursday that says providing these rebates could raise Part D premiums by as much as 40 percent. The report argues that if drug plans are obligated to pay subsidies for these low-income beneficiaries, they might make up the difference by reducing privately negotiated subsidies for better-off beneficiaries, which would result in increased premiums. Drugmakers could also potentially shift drug costs to the private insurance market (Nocera, 7/20).

---

This article was reprinted from kaiserhealthnews.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.