Numbers do matter in Washington. It may not seem like it sometimes, but when a $400 billion program grows to $534 billion and then to $1.2 trillion before it starts, people here do notice.
The $400 billion is what the Bush Administration told Congress, in late 2003, the Medicare Part D drug benefit would cost over a decade. A month or so after the Medicare Modernization Act (which we alone among pharmacy groups opposed) was enacted, the price tag went up to $534 billion. That re-estimate provoked a lot of predictable finger-pointing from the Dems and even some low rumbling in GOP ranks.
But that was nothing compared to the bipartisan eruption this week when the President released his new budget. It pegged cost of the drug benefit at $1.2 trillion for 2006-2015. Even after the Administration argued that premiums from senior citizens and offsets from Medicaid would bring the price down to $720 billion, the political tremors continued.
It's too early tell yet what the outcome of the new cost projections will have. But, significant changes in the program that a few days ago were just talking points for some liberal Democrats and a few maverick Republican budget hawks now are being taken seriously. Especially significant are the actions of some mainstream Republicans.
For example, Sen. Charles Grassley (R-Iowa), chairman of the Finance Committee, is cosponsoring a Rx import bill with Sen. Edward Kennedy (D-Mass.). Sen. Judd Gregg, chairman of the Budget Committee and another Rx import supporter, is saying the Administration better find a source for the $800 billion difference between Medicare's pre-enactment estimate and this week's.
Besides imports, some of what else could be voted on this session because of the difference:
Repeal of the current ban on the government negotiating with the drug companies on prices.
Means-testing, thus limiting the benefit to those who need it most.
A hard cap on program expenditures.
Adjustments to the tax-free subsidies to employers who continue to provide Rx coverage to their retirees.
Oh yeah, seniors who want Viagra or Cialis should count on paying for it themselves. There's even talk of keeping the discount card beyond its 2006 expiration date and postponing implementation of Part D.
Repeal? Unlikely now, but there is a noteworthy precedent. The Medicare Catastrophic Coverage Act - with a drug benefit - was passed in 1988 and scrapped barely a year later before it took effect. The issue that time was the cost of premiums, that were mandatory, not voluntary.
The Administration's lack of credibility on cost is making an increasing number of lawmakers feel they bought a pig in a poke in 2003 when they relied on Administration assurances.
But those assurances weren't just on costs. After the Senate unanimously included transparency requirements and other modest restraints on PBMs that we worked hard to get passed, the Administration persuaded House-Senate conferees that they weren't needed. And - get this - they would hurt PBMs' ability to hold down program costs.
As we repeatedly asked back then, "Can you trust PBMs with a Medicare prescription program?" Seems like there might be two pigs in that poke.
Until next time,
John