Tuesday, January 10, 2006

This is the first month of the new Medicare prescription drug benefit. Most media accounts insist that the worst feature of the plan is the fact that people, not the government, get to decide where to get their drugs from.

A recent analysis in the Wall Street Journal by David Wessel quoted two health-care “experts” that summed up the sentiment of the liberal elites and the mainstream media about the Medicare drug plan: “This market-friendly expansion of Medicare doesn’t seem to be paying political dividends or attracting much consumer interest so far. “This is a test case,” says Jonathan Oberlander, a University of North Carolina political scientist. “It’s a theory in search of population, and they’ve found the wrong population. A lot of what you’re seeing is what happens when you try to turn seniors and people with disabilities into computer-linked consumers. It’s insanity.” “The more choices people have beyond a very limited number, the more likely they are to go to the default,” the choice for people who don’t make any choice, says R. Kent Weaver, a Georgetown University political scientist who has studied Sweden.”

Mr. Oberlander supports single-payer health care along the lines of Canada. Mr. Weaver believes that the near bankrupt pension systems of Sweden and Britain are good models for pension reform for the United States. In both cases, these two experts believe that government control over consumer choices is just better. As for Mr. Oberlander’s belief that trying to turn that seniors or people with disabilities into computer-linked consumers is “insanity,” both my parents are among the 12 million seniors in the United States who have gone online as of July 2004, according to Nielsen/NetRatings. The 65-plus comprise the fastest-growing age group on the Internet.

I find it incredible that the media and liberal elite think that millions of people who choose homes, retirement communities, colleges for their children and insurance plans will somehow be unable to be part of what is really the first large-scale example of a true consumer health care product. Indeed, what is really gnawing at the liberals is the fact that Medicare Part D is truly a tipping point or a point of no return away from government control health toward consumer-controlled medicine.

As Stan Novak notes in Managed Care Executive: “Before Medicare Part D, elements of consumerism in the healthcare marketplace included coinsurance, Consumer Directed Health Plans (CDHPs), Healthcare Savings Accounts (HSAs), and tiered copay systems. These all compel increased consumer participation and include financial incentives. But the only true test for a consumer product is free choice, the ability for a consumer to walk across the street and meet the same need at a different store. This is almost never a possibility with traditional consumer plans or plan features.”

The drug benefit will rock the world of health care just as the free agent market did Major League Baseball. Mr. Novak goes on to point out that even when employees have the option of choosing a CDHP over a traditional plan, they almost never have the option to choose which CDHP to use. In Medicare Part D, 42 million Americans have the ability to choose. First they’ll choose a plan based on the brand, the formulary, the premium and services offered. Once enrolled, they’ll have to make choices about drug switching encouraged by the plan and whether they want to participate in available services. They’ll have to determine how to pay for drugs after they used up their benefits. Finally, they’ll be evaluating their own level of satisfaction with the plan, assessing other available options, and determining whether to re-enroll or choose a new plan at the end of the year. In an effort to keep customers, drug plans have added over a hundred drugs — primarily brands — to their 2006 formularies over and above what Medicare requires and reduced the portion people have to pay for new drugs since the Part D plans were approved last fall.

As I will elaborate on in a subsequent column, in the future drug-benefit competition will center on health outcomes, responsiveness to specific medical needs, the ability of plans to reduce total health spending and the capability of plans to develop a suite of tools to personalize care. Such tools will allow individuals to compare different drug plans to Medicare managed-care offerings that combine prescription drugs as part of a coordinated health program.

All bets are off then. Do you think 42 million Americans are going to want politicians dictating their choice of drugs? The government’s grip on health is weakening and liberals hate it. That’s why all the Medicare drug-benefit news has been so negative. The revolution in medical freedom has begun and there is nothing liberals can do to stop it.

Robert Goldberg is director of the Manhattan Institute’s Center for Medical Progress.

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