He argues in this piece over at Town Square Delaware that seniors who are taking advantage of Medicare Part D subsidies and co-pays are stealing. To be fair, the analogies and even the basic metaphor here are incredibly tortured. Starting with trying to make the hold up a bunch of convenience stores somehow the equivalent of presenting an insurance card to get a discount on medications, then moving on to claim that savings from the Medicare Part D aren’t savings, then working at trying to wrap around all of it around no free lunches, government taking, the NJ needing to report better and Astra Zeneca laying people off. (This was sent to be by a GOP pal, who noted in his email to me “You will have a field day with this!”)
The take away from this piece is that this so-called businessman doesn’t know how insurance works. If you have private insurance, medications are typically covered in a tiered fashion. Your employer (or whoever manages this for your employer) very often negotiates better pricing for medications in the Tier 2 level of the Formulary. Your co-pay is higher here, but you are usually paying less than full price. And why not? Negotiating a better deal is supposed to be how business is run, right? This is how payments to doctors, hospitals and other facilities work as well — the “in network” providers have agreed to a negotiated price. Out of network providers typically have not, which is why you pay more for care outside of the network. The negotiation of pricing is key to how private insurance works now.
But Ken Simpler wants you to know that when the government does this negotiation on behalf of seniors , that *this* is stealing. Even though the government negotiates rates for its employees covered by insurance; even though the government negotiates medication pricing for the VA; even though the government negotiates pricing for Medicaid medications. It is only stealing when seniors using their Medicare Part D benefits use those subsidies and lower rates.
Even then, Medicare Part D doesn’t allow Medicare to negotiate a better price for medications. This was part of the deal for pharmaceuticals to not object to the ACA. What *does* happen, though, is that as the “donut hole” is closing (it should be completely closed by 2020, I think), and once you reach the coverage gap, there are discounts on many medications that senior have to pay out-of-pocket for. For 2014, the discount for name brand medications is 47.5%, and 28% for generics. The discounts increase for 2015. These aren’t negotiated rates, since these discounts do not cover all Medicare medication purchases, but are meant to ease the costs when you get to the plan donut hole. Pharmaceutical companies are providing discounts on some of their drugs — like they do for plenty of other insurance plans — and there isn’t one of them that is suffering because of these discounts. (They may be suffering for other reasons, but these discounts are not their problem. Because they would stop offering discounts to EVERYBODY if that was the case — every business person gets this.)
Letting Medicare actually negotiate a better deal for medications not only a good idea, but this counts as a business Best Practice that should be implemented for this program. Why should private insurance just get the better deals? And getting a better price on meds isn’t stealing when your employer does it, nor is it stealing when a major buyer like the government does it. But here we have one more GOP “businessman” who is peddling a load of bullshit that would get him kicked off of the board of any company he would suggest should stop negotiating for a better medication price. Squaring the circle between wingnut ideology and how business really works should be a bigger problem for the GOP, except that their base are folks who will never be in a positions to look at these kinds of business considerations anyway.
Sean Barney highlighted this piece by Simpler comparing armed robbery to getting discounted medicine for seniors in his press release after the election. Good for him, because there are plenty of us who want to know how is it that a so-called “finance guy” doesn’t know how negotiations for medical services actually works?