Docs, drug companies, insurers drive up Medicare costs

Wendell Potter

As one of an estimated 78 million baby boomers in this country, I was delighted to hear that Medicare’s Hospital Trust Fund won’t run out of money until 2030 — 13 years later than projected in 2009, the year before Congress passed the Affordable Care Act.

While it’s uncertain how much of that good news can be attributed to the health care law, some of the provisions aimed at slowing Medicare spending, such as requiring Medicare to reduce payments to hospitals with high readmission rates, are likely helping.

But the Hospital Trust Fund accounts for only about half of total Medicare spending. Most of the rest goes to cover physician fees, prescription drugs and to provide incentives for health insurance companies to participate in the Medicare Advantage program and administer the Medicare drug program.

The Affordable Care Act could have done much more than it does to curb spending in those areas. Because it doesn’t is a testament to the power and influence of the lobbyists who represent doctors, pharmaceutical companies and health insurers.

Some lawmakers, including Rep. Henry Waxman, D-Calif., and Sen. Jay Rockefeller, D-W.Va., wanted to include language in the law that would have allowed Medicare to negotiate prices with drug companies. That’s something that has long been a policy priority for patient and consumer advocates. But drug companies and their lobbyists are far more powerful and have far more money to spend to influence elections than any patient advocacy group could ever hope to have.

Late last month, two of the advocacy groups — the Medicare Rights Center and Social Security Works — released a report suggesting that Congress could save taxpayers $141 billion over 10 years just by reauthorizing a program that was eliminated at the behest of drug makers when lawmakers enacted the Medicare prescription drug benefit (Part D) in 2003.

The groups noted that while the prescription drug benefit helped Medicare beneficiaries afford their medications, “the law also severely limited the government’s ability to control Medicare drug prices.”

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This story is part of Wendell Potter. Former CIGNA executive-turned-whistleblower Wendell Potter writes about the health care industry and the ongoing battle for health reform. Click here to read more stories in this blog.

Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.