Last summer, Americans for Prosperity analyzed the disappointing Medicare reforms in the president’s signature health care law. This month, President Obama suggested additional so-called reforms to Medicare in this State of the Union speech. Just like his reforms in 2010, these proposals fail to address the underlying issues in Medicare. One reform in particular, Medicare D drug rebates, cloaks a tax hike for seniors in the rhetoric of class welfare.
Medicare Part D was created in 2006 to allow seniors to purchase prescription drug coverage to support traditional Medicare coverage. The program harnesses the power of the free market by allowing insurance companies to compete for business. Seniors have numerous options for purchasing their coverage, and the program has been wildly successful. Almost 90% of seniors are satisfied with the program and costs are 40% below original estimates—an incredible feat for any government entitlement program.
During the State of the Union, the president said “We’ll reduce taxpayer subsidies to prescription drug companies.” This seems like a great idea that everyone should support. But like most things from this President, his rhetoric distorts and disguises the real issue.