KRUGMAN: Liberals, don’t apologize for Medicaid growth---It’s just what the, um, Doctor ordered.

[kpete]

The Medicaid Cure

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One thing I haven’t seen mentioned much, however, is that another aspect of recent developments — the rapid rise in Medicaid enrollment, despite Republican efforts to block it — adds to the prospect of continuing good news on health costs.

Medicaid gets a bad rap. It’s a poor people’s program, and it’s widely assumed that this means poor care. In fact, there’s not much evidence that this is true, and claims that Medicaid patients can’t find care are greatly exaggerated. Beyond that, however, Medicaid is the piece of the US health care system (aside from the VA) that does the best job of controlling costs. It does this by being able to say no. For example, it’s able (in a way Medicare so far can’t) to say that it won’t pay for me-too drugs that are far more expensive than equally or almost equally good alternatives. This ability to say no, combined with its size, means that Medicaid covers people far more cheaply than private insurance, and probably than Medicare.

One way to think about this is that Medicaid is actually the piece of the US system that looks most like European health systems, which cost far less than ours while delivering comparable results.

Now, expanded Medicaid is a key part of Obamacare — and so far, despite GOP obstruction, Medicaid enrollments have outpaced insurance through the exchanges. This is often reported as if it were a bad thing — as if Medicaid were somehow a fake solution, as if only purchases of private insurance count. But Medicaid is good, very cost-effective coverage! And rising Medicaid enrollment is, aside from a huge benefit to the previously uninsured, a step toward better cost control in the system as a whole.

MORE:
http://krugman.blogs.nytimes.com/2014/01/10/the-medicaid-cure/?_r=1&

[Mass]

1. I do not disagree with that, but, if this is that great, why not Medicaid for all?

Paid by taxes and applied to the entire population, it would indeed be a better way to deal with the problem.

[rurallib]

2. I wouldn't care if you called it single-payer, Medicare or Medicaid

a single payer systems makes the most sense. We have been trying for a hundred years to get such a system.

[geek tragedy]

3. Because Medicaid has a stigma to it amongst

some voters, whereas even rich old white Republicans love Medicare.

[jwirr]

6. Medicaid in MN used to be administered by Blue Cross. There would have to be people hired to

this job in a single payer system. But you are correct - we do need to think about the workers who would be put out of work by ending the private system. I for one will not worry about the owners. They have made their bundle.

[ProSense]

5. Medicare could benefit

from a drug program similar to Medicaid's

Medicaid Drug Rebate Program

<...>

The Medicaid Drug Rebate Program is a partnership between CMS, State Medicaid Agencies, and participating drug manufacturers that helps to offset the Federal and State costs of most outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 drug manufacturers currently participate in this program. All fifty States and the District of Columbia cover prescription drugs under the Medicaid Drug Rebate Program, which is authorized by Section 1927 of the Social Security Act.

The program requires a drug manufacturer to enter into, and have in effect, a national rebate agreement with the Secretary of the Department of Health and Human Services (HHS) in exchange for State Medicaid coverage of most of the manufacturer’s drugs. When a manufacturers markets a new drug and electronically lists it with the FDA, they must also submit the drug to the Drug Data Reporting (DDR) system. This ensures that states are aware of the newly marketed drug. In addition, Section II(g) of the Rebate Agreement explains that labelers are responsible for notifying states of a new drug’s coverage. Labelers are required to report all covered outpatient drugs under their labeler code to the Medicaid Drug Rebate Program. They may not be selective in reporting their NDC's to the program. Manufacturers are then responsible for paying a rebate on those drugs each time that they are dispensed to Medicaid patients. These rebates are paid by drug manufacturers on a quarterly basis and are shared between the States and the Federal government to offset the overall cost of prescription drugs under the Medicaid Program.

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Medicaid-Drug-Rebate-Program.html

The ACA increased the Medicaid rebate percentage.
http://www.medicaid.gov/AffordableCareAct/Timeline/Timeline.html

Issue Brief - Medicare Drug Negotiation and Rebates

<...>

Medicare Part D is a voluntary prescription drug benefit for Medicare beneficiaries, established in 2003 under the Medicare Modernization Act (MMA). Prior to this law, Medicare did not offer a prescription drug benefit. In 2012, almost 65 percent (over 30 million) of Medicare beneficiaries were enrolled in a Part D plan (MedPAC, 2013).

Medicare Part D went into effect in 2006, providing prescription drugs through private stand-alone prescription drug plans (PDPs) and Medicare Advantage (MA) plans. Part D drug prices are determined through a negotiation between the private drug plan that administers the benefit and the drug manufacturer. By law, the federal government cannot negotiate for Medicare drug prices...Prior to the implementation of Part D, Medicaid paid the drug costs for individuals who were dually eligible for Medicare and Medicaid. Dually eligible individuals are generally low-income, sicker and expensive to treat. The costliest 20 percent of dual eligible individuals account for 66 percent of Medicare spending (MedPAC, 2012). When Part D went into effect, dually eligible beneficiaries’ drug coverage switched from Medicaid to Medicare and the manufacturer discounts were discontinued.

<...>

Savings. One argument is that billions of dollars of savings would be produced if the federal government negotiated for Medicare drug prices. While there are no current Congressional Budget Office (CBO) cost estimates for federal drug negotiation, a report from the Center for Economic and Policy Research (CEPR) estimates that savings to the U.S. government would range from $230 billion to $541 billion over 10 years (Baker, 2013). CEPR noted that the U.S. pays twice as much as other wealthy countries for prescription drugs because their governments are able to negotiate for lower prices.

<...>

Best Price. A third argument is that it makes sense for Medicare to receive the best price available for prescription drugs, just like Medicaid and the VA. In Medicaid, the drug manufacturer provides the federal government discounts for drugs, which are shared with the states. The discount is either the minimum drug amount or an amount based on the best price paid by private drug purchasers, whichever is less. Current law requires drug companies to charge Medicaid 23 percent less than the average price they receive for the sale of a drug to retail pharmacies. Drug companies also must provide another discount if a drug’s price rises faster than the rate of inflation (Thomas and Pear, 2013)...Medicaid rebates, if applied to Part D, would save the federal government money. According to a 2011 study conducted by the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services, Medicaid rebates were three times greater than the discounts negotiated by Part D for 100 brand name drugs. In 68 of these drugs, Medicaid rebates were twice as high as rebates granted by the drug companies for Medicare drugs (OIG HHS, 2011; Hulsey, 2013). Similarly, a 2008 study of drug pricing information by the U.S. House Committee on Oversight and Government Reform found that Part D paid, on average, 30 percent more for drugs than Medicaid (Hulsey, 2013).

- more -

http://www.ncpssm.org/PublicPolicy/Medicare/Documents/ArticleID/1138/Issue-Brief-Medicare-Drug-Negotiation-and-Rebates

The President has proposed the same rate for Medicare (http://www.democraticunderground.com/10022670043 ), which would save even more than the Senate proposal (http://www.democraticunderground.com/10022725266), $164 billion to $141 billion, respectively.