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WebMemo #04-07 on Health Care

February 21, 2007

Medicare Malady #04-07: Making a Mess of the Medicare Drug Coverage


John O'Shea doesn't play a doctor on TV. He is one - a Harvard educated surgeon with first-hand experience in dealing with Medicare.

His memo to the Senate about proposals to have the Medicare bureaucracy "negotiate" drug prices is must-reading for those who care about the quality of health care provided through the Great Society program. If you think everything will be just fine once the government starts "negotiating," O'Shea writes, just take a look at how well Medicare has "negotiated" the cost of various medical procedures for doctors - and what it means for patient treatment.

"When Medicare was enacted in 1965, Congress statutorily prohibited government from interference in the practice of medicine," O'Shea notes. But that prohibition has been "largely ignored." Today Medicare imposes a complex and cumbersome pricing system covering more than 7,000 physician services. The result: coverage does not always extend to new, more effective treatments; patient access to doctors is compromised, and still costs increase.

Medicare coverage of prescription drugs will deteriorate in similar fashion, O'Shea warns, if Congress insists on making bureaucrats determine which drugs the program will cover, at what prices. Look for higher prices, less quality and more bureaucracy. "As senators weigh the merits of such an approach, they should keep in mind that the Medicare physician payment system...is a mess," O'Shea writes. "It should serve as a warning."

To read more about the dangers of letting government "negotiate" Medicare drug prices, click here.

For more information or to receive an e-mail version of "Medicare Maladies," contact medicaremaladies@heritage.org or call Heritage Media Services at (202) 675-1761. ("Medicare Maladies" is a regular feature, first launched in 2003 and revived in 2007, from The Heritage Foundation. Sad to say, there's another malady coming your way soon. Other "maladies" are also available on heritage.org.)

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