» A Bush success, not that he gets credit (James Capretta & Peter Wehner, Weekly Standard)
Link:For years, governmentalists have been able to dismiss the arguments of market reformers as nothing more than theoretical dreaming, with insufficient real-world evidence to back up the claims. Of course, all the while, governmentalists opposed every effort to give market forces a chance to work.
But that all changed with enactment of the Medicare prescription drug benefit. While congressional governmentalists, led by Senator Hillary Clinton, fiercely opposed the bill's passage because it included the introduction of unprecedented levels of competition, the bill passed in December 2003.
The governmentalists were right about one thing: The new drug benefit is unquestionably designed to encourage market competition. But on everything else, they were mistaken.
The drug benefit's market-based tilt is not complicated. Medicare beneficiaries choose every year from among competing, privately run drug-coverage plans. The government's contribution toward this coverage is set at a fixed percentage of the average premium, and no more. If beneficiaries want to enroll in a plan that costs more than the average, they can do so--but they, not the government, must pay the additional premium.
This structure provides strong incentives for the drug coverage plans to secure discounts from manufacturers and encourage use of lower cost products over more expensive alternatives. Drug plans that fail to cut costs risk losing enrollment to cheaper competitors.
Still, the governmentalists found this design wanting and predicted failure. Their argument was that private insurers wouldn't offer coverage, so the price competition would be weak. Costs would soar without government-set price controls. Beneficiaries wouldn't sign up because the premiums would be too high. The program would collapse under the weight of a public yearning for government-run simplicity.
On all these points, the governmentalists were wrong.
http://www.eppc.org/publications/pubid.3375/pub_detail.asp#4-25-2008
Posted by Kevin Whited on 26 April 2008, 09:27 PM
Filed under: General, Health/Medicine, American Politics
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Citation: Sphere: Related Content | Technorati | Bloglines | Add This
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