Why Medicare Part D Passed

medicare part D
medicare part D

The MMA (Medical Prescription Drug, Improvement and Modernization Act) became law back in the year 2003 (Matthews, 2006). Through the act, Medicare part D drugs were also created and implemented from the 1st of January in the year 2006. This was done for the purpose of providing drugs coverage to elderly people through stand-alone or private drug plans (Krugman, 2006). The elderly people in the society who did not have drug coverage in the past now have it as the law’s structures increase the role of private plans in the provision of Medicare (Matthews, 2006). The most supportive group for the creation and implementation of Medicare part D were the Republicans, from the 2003 Bush administration, whereas the Democrats were largely opposed to its creation and implementation. Both of these groups were very powerful within the political and policy making circles of the US and still are to date (Clinton, 1993). This paper therefore ascertains how various stakeholders groups influenced the final outcome of the Medicare Part D legislation and the specific strategies along with tools that were used most effectively. It finally provides my response as to whether the passage of Medicare part D corresponds with my understanding of policy and politics.

How did various stakeholder groups influence the final outcome of Medicare Part D legislation?

The various stakeholders involved in the Medicare act of 1965 and the subsequent Medicare part D act in the year 2003 were the Republicans and Democrats at the House of Congress and Senate, the American Medical Association (AMA), various Senate Committees like the Ways & Means Committee and Policymakers (Zwillich, 2006). The influence by various stakeholders on the final outcome of Medicare program can be traced to almost four decades ago (Matthews, 2006). Medicare within America was enacted back in the year 1965 when President Harry Truman was in office though it had a limited scope. It reflected the political fight that the President had previously encountered against the American Medical Association (AMA) when he introduced several proposals for the National Health Insurance. This took place from the year 1945 to 1948 and was followed by a big defeat against ‘socialized medicine’ on Truman in 1949 at the hands of the AMA (Krugman, 2006). The first ideas on health insurance programs for the elderly were proposed by a man known as Oscar Ewing who at the time was heading the administration of federal security (Matthews, 2006). Several annual hearings between the years 1958 and 1965 were also held by members of the senate committees on Finance, Means and House ways to discuss various proposals on offering the elderly hospital insurance. These hearings provided a forum through which the groups opposed to the federal government’s involvement in medical care views were aired (Clinton, 1993).

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Following the landslide victory in the elections of 1964 by democratic president Lyndon Johnson, the passage of a law ensuring the provision of medical assistance to the elderly people was surely going to take place. This was evident in its final passage of the Medicare act in the year 1965 (Matthews, 2006). Though the act passed emphasized on covering hospitalization costs through universalized social insurance mechanisms, the republicans had their own proposals (Zwillich, 2006). The Republicans urged for voluntary enrollment into health insurance programs that were financed through the payment of premiums payable by the beneficiaries and subsidized through the general revenues collected (Krugman, 2006). The Republican’s proposal had additional benefits that included the provision of prescription drugs and the offering of physician services. The AMA, on the other hand, proposed that the Kerr-Mills program that had been enacted back in the year 1960 should be expanded through the use of state-based and means-tested programs of understandable benefits (Matthews, 2006). All these proposals were voiced against the adoption of the Medicare act of 1965 though the priority of the Medicare architects remained dealing with the uncertainty raised by hospitalization costs among the elderly and retired people (Clinton, 1993).

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From the beginning of its enactment by Democrats, the Medicare act covered prescription drugs that were offered by physicians and not those that were self-administered by the patients themselves. This limitation was meant to prevent physicians from hospitalizing patients just for the sake of getting a certain prescribed drug (Matthews, 2006). Medicare coverage was expanded to cater for patients suffering from terminal renal diseases in the year 1972 but led to high costs that were associated with the types of treatment offered to these patients (Krugman, 2006). More prescription drugs administered commonly by physicians in their offices like immunosuppressive drugs and orally administered drugs for cancer to the elderly have since been included as to be provided under the cover of the Medicare law (Matthews, 2006).  Congress has been routinely adding more amendments that mandate Medicare coverage for pharmaceutical, biotechnological and medical companies. These actions have in turn increased the number of prescription drugs which fall under Medicare and are physician dispensed to around 454 drugs. The cost of $6.5 billion as at the year 2001 compared to the $700 million incurred back in the year 1992 brought the quick attention of the country’s policymakers (Zwillich, 2006). This was mainly because Medicare was found to be paying two to ten times the value charged by manufacturers for these prescription drugs (Matthews, 2006). Following the discovery, Medicare was given statutory authority to deal with the setting of payments for prescription drugs acquired and dispensed on the basis of “inherent reasonableness”. This was in response to pressure being brought by pharmaceutical industries, physicians and the suspended regulatory development agency in the year 1999 (Krugman, 2006).

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A new payment method for any physician administered drug was instituted by Congress during the addition of the benefits of outpatient prescription drugs to the Medicare Act in the year 2003. The 2003 Republican Bush Administration largely supported the creation of Medicare part D whereas the Democrats heavily criticized its creation and its implementation (Clinton, 1993). Under the act, prescription drugs were not to be offered to the public directly by Medicare but through plans from private prescriptions and advantage organizations that were under Medicare. The latter were private health plans that were offered under Medicare (Krugman, 2006). Under the act, the standard benefits available have been outlined but through private plans the benefit design can be modified (Matthews, 2006). These private plans may be able to set their premiums, design formularies and can use tools like prior authorization, quantity limits and step therapy for cost management. The private plans are therefore entitled to the reimbursement of their drug costs from Medicare under the act (Bartlett, 2009). Despite admitting that the Medicare drug benefit has had difficulties in implementation the Bush administration urges that its benefits have helped many people (Krugman, 2006). In supporting his party’s stand, President Bush held that prescription drug plans formulated under Medicare had reduced costs among beneficiaries and even the taxpayers. He urged that on average, the beneficiaries of Medicare pay about a half of the total amount previously paid for medication before drug benefit under part D was implemented (Zwillich, 2006).

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On the other side, the Democrats have voiced their intentions of seeing various legislative changes on Medicare part D drug benefits implemented. They have proposed that more drugs should be included in the drug plan cover and more time should be added to the deadline for beneficiaries willing to sign up for the programs (Krugman, 2006). According to the Democrats more time should be added to the deadline for signing up for the programs as under the current law higher premiums are charged for patients’ enrolling after the deadline has passed (Clinton, 1993). The amount is increased by 1% for every month that a person had not enrolled for benefits under the program for the period they are in it. Therefore, from the deadline issue the democrats have consistently argued that the beneficiaries to these private health plans established under Medicare part D require more time to chose among the numerous and dissimilar plans by private health providers that are on offer (Krugman, 2006).

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Various other changes that include: the creation of steps to standardize drug plans under Medicare for the purpose of simplifying comparative shopping and provisions barring insurance plans for removing a drug from a formulary in the same year a person enrolls and the extension of the deadlines set by different states for the application of reimbursements among other provisions have been proposed (Clinton, 1993).

What were the specific strategies and tools that were used most effectively?

Lobbying by pharmaceutical industries was used as a tool for ensuring the passage of the Medicare part D act. The passage of the act in 2003 shows what abuse of political power can result to (Matthews, 2006). The strategy adopted by passing Medicare part D was aimed at ensuring that the huge deficit faced by President Bush was overlooked and the president got re-elected in the year 2003 (Zwillich, 2006). Its passage was representative of the powers possessed by lobbying forces as a tool which aimed at dictating or controlling policies on community health care (Krugman, 2006). Part D actually replaced any previous medical coverage provided by drug discount cards from Medicare, Medigap plans and numerous care plans. It helped greatly reduce expenses incurred by patients requiring prescription drugs on an annual basis (Matthews, 2006). However, increased costs for low income patients were witnessed as they have to pay for more money than they paid for when covered by Medicaid programs that were state sponsored (Bartlett, 2009).

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In the year 2003, the Bush administration projected the largest deficit to ever be witnessed in American history amounting to $475bilion. Therefore, with an election looming the following year, the Republican Party sought to capture the votes of the elderly American population by promising to cater for the costs of their prescription drugs under the new program (Matthews, 2006). The trustees of the 2003 Medicare report projected that spending would increase more than the government’s earnings. The Republicans who already had this information suppressed it before it could be released to the public and exerted unwarranted influence on fellow Republicans to have the law passed (Krugman, 2006). The costs given to the House of Congress at the time as the costs likely to be incurred for the first ten years was $395billion, a figure which was not accurate (Matthews, 2006).

The lobbying witnessed among pharmaceutical companies produced big financial benefits for them. Those who had been lobbying for the bill’s passage eventually found themselves with highly paying positions in lobbying firms after it was passed (Bartlett, 2009).

Does the fact that Medicare Part D passed correspond with your understanding of policy and politics, or did this surprise you? Explain your response.

The passage of Medicare part D does correspond with my understanding of policy and politics. Its passage was meant to win re-election for the Bush administration in the year 2003 and was created mostly with the interests of pharmaceutical firms at heart. This is mainly because the passage of Medicare part D was not in the best interest of the citizens as it came at a time when there was a looming economic deficit and the exact deficit figures were suppressed by those in power, the Republicans, and the public missed the information (Zwillich, 2006). In addition, after its passage those who benefitted most were the lobbyists and not the elderly citizens as shown by the incurrence of greater costs among the low-income citizens (Krugman, 2006).

In conclusion, the passage of Medicare part D did not surprise me as the policy makers in a country are greatly influenced by politics, according to my understanding of the two concepts. 

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