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Washington Post Editorial - Medicare Shortcomings

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Medicare Shortcomings
Tuesday, February 24, 2004

The following letter to the editor by House Democratic Leader Nancy Pelosi appeared today in The Washington Post:
Medicare Shortcomings

The Feb. 17 editorial "Pricing Drugs" revived stale arguments about price controls that drugmakers and Republicans use whenever improvements to Medicare are proposed.

Having Medicare negotiate the best price is not the same as setting a price.

If WellPoint can use the purchasing power of its 26 million customers to lower prices, Medicare should be able to do so for its 40 million customers.

Nor would Medicare be the first public agency to negotiate prices. State Medicaid programs and the Department of Veterans Affairs (VA) do. The National Academy of Sciences has found that the VA drug-purchasing plan significantly reduced drug expenditures without sacrificing quality.

And except when Congress sets a reimbursement rate in law, Medicare has been an adept purchaser of health care services. Medicare's annual administrative costs also are just 3 percent of its budget; private insurers' administrative costs average 15 percent.

A study by the Boston University School of Public Health found that the Medicare law will lead to $139 billion more in profits for drug companies. It concluded that "these unrestrained prices-given the remarkably low real cost of producing the added volumes of pills that Medicare patients need-will bestow enormous windfall profits on prescription drug makers."

This is wrong, and it is why Democrats want to repeal this lemon of a law, which creates a $46 billion slush fund for Medicare HMOs while leaving seniors with higher out-of-pocket costs and a huge gap in coverage.

We need a law that provides a guaranteed, defined, accessible, affordable Medicare benefit and that negotiates prices and lowers drug costs.


U.S. Representative (D-Calif.)

House Minority Leader

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