Make Of It What You Will

September 15, 2009 at 1:14 pm (By Maxwell James)

The progressive blogs are aflutter over this RWJF-sponsored poll (H/T Klein). I’m not a big believer in the public option but I found the results interesting.


  1. Randy said,

    With that in mind, those who think they already know everything they need to know about the Medicare drug plan (Part D) might benefit by reading this post at Marginal Revolution as well as clicking through the links therein.

    Money quotes from research results published by the National Bureau of Economic Research:

    In spite of its relatively low benefit levels, the Medicare Part D benefit generate $3.5 billion of annual static deadweight loss reduction, and at least $2.8 billion of annual value from extra innovation. These two components alone cover 87% of the social cost of publicly financing the benefit.


    Overall, a $1 increase in prescription drug spending is associated with a $2.06 reduction in Medicare spending.

  2. Maxwell said,

    Wow – that’s something I never expected to read. Thanks, Randy!

  3. lfineaux said,

    I followed some links and don’t know how I got there, but it was another MR post which said that all the savings of Part D were wiped out by Medicare Advantage HMOs. Since my son is in one of those and it’s been a nightmare which essentially through bureaucratic blunders has essentially denied him treatment for 3 of the 9 months he’s been on the plan.

    For one thing, the formulary is so restricted that 3 out of 5 drugs he’d been prescribed were not available. He’s got to “fail” on treatment with less expensive drugs for 3 months before he can get the drugs his doctors obviously think are better for him.

    I run into the same “formulary” problems with Tricare and my Dad has them with the VA.

  4. Randy said,

    I’m sorry to hear that, Donna. That said, the problem is not unique to government plans, as formularies are in widespread use in both public and private plans, and denials for expensive non-formulary medicines are routine .

  5. lfineaux said,

    That’s true Randy. But it doesn’t mean it’s right. And I don’t see any reason to promote the practice.

  6. lfineaux said,

    I should add that some very expensive drugs for which there are generic substitutes still make it onto both the Medicare and Tricare formularies. I’ve not kept up so well with the VA formulary, although I know that my Dad takes two medications per the VA while I can get the combined drug through Tricare.

    What bothers me the most is that there seems to be no “sense” involved in creating the formularies.

  7. Randy said,

    That’s because different people are making the decisions as to what qualifies for a formulary. Are you suggesting that all formularies (for public & private plans) be set by one committee? Formularies are a form of cost containment for health plans that became popular as a result of widespread abuse years ago. Permission to go off-formulary is difficult to get because everyone who wanted to would then attempt to do so. They aren’t perfect, as your son’s experience apparently shows. If formularies are abandoned, however, we can be sure that costs will soar.

    BTW, depending on the manufacturer, your son may be eligible for very low-cost direct purchase. It might be worth checking into.

  8. lfineaux said,

    I’m not suggesting that formularies be set by one committee, rather I’m suggesting that there is no rational or logical basis to the setting of formularies. One particular drug I take has been on the formulary, then off, then on again.

    This, to me obviously has no grounding in the price or efficacy of the drug — it is simply arbitrary or due to market conditions that have nothing to do with health care.

    I am completely unpersuaded by the argument that it can’t be allowed because the everyone would want it.

  9. Randy said,

    Here is some interesting information about Medicare formularies.

    Medicare drug plans must include at least two drugs in each category and class it designates, although the Centers for Medicare & Medicaid Services (CMS) may require plans to include more than two drugs for some categories and classes. Plans may use or refer to a model created by the United States Pharmacopoeia (USP) in setting up their formularies, but are not required to do so. The USP’s model formulary contains 146 unique therapeutic categories and pharmacologic classes.

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