Capretta Responds to Ezra On Ryan Care
[W]hen Rep. Paul Ryan proposed a broader reform of Medicare that is modeled on the Part D success story … Washington Post blogger Ezra Klein … argued: (a) that spending on prescription drugs throughout the health-care system (that is, not just in Medicare) is also far below previous expectations, which proves that Part D’s market-based design had nothing to do with costs’ coming in under budget; (b) that, regardless of what has happened to date, future Part D spending is expected to rise rapidly, thus undermining claims of cost discipline; and (c) that Part D premiums are 57 percent higher in 2011 than in 2006.
Unfortunately for Klein, each of these criticisms is easily dismissed.
See full James Capretta piece.
Go get ’em, Jim. Show no mercy.
The economy and generic drug approvals have kept drug spending in check. But the private Medicare Part D plans have kept premiums down by managing their plans well. These plans compete for seniors’ business.
Capretta’s reply to Klein is off target. Klein argues that Ryan was wrong to claim that since Medicare Part D costs did not increase as much expected, Ryan’s plan would be successful. The factors that explain the low cost have nothing to do with the possible success of Ryan’s plan.
The reasons behind the lower than expected costs for part D are:
Drug innovation is less than expected, and more generics than expected are being used. Capretta points out that other private insurance drug plans also increased less than expected due to a lower rate of drug innovation, but that is irrelevant.
Fewer seniors than expected signed up for part D. I don’t see how this proves Ryan’s plan will be successful, and Capretta didn’t dispute that.
Also the subsidy for Ryan’s plan is capped at inflation, and part D is not. Drugs and medical care expenses are increasing at a higher rate than inflation, whether it is private insurance or Medicare. This could cause seniors who can’t afford it, to forgo getting care.This argument was not replied to by Capretta.
I have a hard time taking Ezra Klien seriously.
@Devon Herrick says:
June 22, 2011 at 1:08 pm
You claim, without evidence that competition has held down Medicare part D costs. It may have. The question is, compared to what? Does this prove that Ryan’s medicare voucher plan is going to be adequate? Does it invalidate the criticism of Ryan’s arguments that Klein makes in his blogpost? The answer is no.
Part D may be better than expected at its inception, but as Klein pointed out, the increase in proportion of generic drugs are a big part of the explanation. Despite this, the advance in cost has been far greater than inflation, which is the proposed limit on Ryan’s vouchers. For that reason, the data on part D doesn’t prove Ryan’s plan is unsustainable.
It is clear from the data, that other countries such as France spend 1/2 of what the US spends on health care, and their cost growth has been less than the US. It is foolish to ignore this success because the methods used don’t fit your economic ideology. Other Governments negotiate drug prices down, the US government is forbidden from doing so by law. Capretta didn’t deal with that part of Klein’s argument, which seems to me very powerful, because it is backed by data. All developed countries are struggling to hold health care costs to a sustainable level. They have been clearly more successful than the US government, without sacrificing the health of their populations, and without denying health insurance to 17% of their people.