obama to reduce medicare costs

PharmacoEconomics & Outcomes News 672 - 23 Feb 2013

Obama to reduce Medicare costsIn his 2013 State of the Union Speech, President

Barack Obama has said that the US government willenact reforms to reduce the cost of Medicare.1

Obama said that the rising cost of healthcare for anaging population was the major driver of long-term debt,and he added that for Medicare he was "prepared toenact reforms that will achieve the same amount ofhealthcare savings by the beginning of the next decadeas the reforms proposed by the bipartisan Simpson-Bowles commission*", which proposed healthcaresavings of $US341 billion.

He acknowledged that the Affordable Care Act ishelping to slow the growth of healthcare costs, but hesaid that the reforms will go further than that. "We’llreduce taxpayer subsidies to prescription drugcompanies and ask more from the wealthiest seniors.We’ll bring down costs by changing the way ourgovernment pays for Medicare, because our medicalbills shouldn’t be based on the number of tests orderedor days spent in the hospital – they should be based onthe quality of care that our seniors receive", he said.

Drug price negotiations the answer?A possible way to cut the costs for Medicare would be

to allow Medicare to negotiate drug prices like otherwealthy countries, and data from the Center forEconomic and Policy Research (CEPR) show that thefederal government could save as much as $541 billionby 2022 if this was the case.2 Additionally, stategovernments could save from $31 billion to $72 billion,and consumers could save from $48 billion to$112 billion over the same period.

Co-director of CEPR, Dean Baker, says that it is"ridiculous for Medicare to be paying drug companiestwo and three times as much money for drugs as othercountries at a time when we are cutting essentialprograms".* The Simpson-Bowles commission refers to the National Commissionon Fiscal Responsibility and Reform, which Obama created in 2010 toidentify policies that would give financial sustainability to the US.

1. Davies E. Obama promises to act on Medicare costs, medical research, and guncontrol. BMJ : 14 Feb 2013. Available from: URL: http://dx.doi.org/10.1136/bmj.f1034.

2. Center for Economic and Policy Research. Armed With Powerful New Data,Progressive Groups Launch Grassroots Campaign to Enable Medicare Drug-Price Negotiations. Media Release : 14 Feb 2013. Available from: URL: http://www.cepr.net.

801085651

1

PharmacoEconomics & Outcomes News 23 Feb 2013 No. 6721173-5503/10/0672-0001/$14.95 Adis © 2010 Springer International Publishing AG. All rights reserved