Stanley Feld M.D., FACP, MACE Menu


Is Barack Obama Any Different Than Other Politicians? Part 4


Stanley Feld M.D.,FACP,MACE

I continue to look at Barack Obama’s statement puny statement on subsidies.


“Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.”

Is this a false hope? Another example of a deficient subsidy is Medicare Part D. Again, the intention was good but the construction of the subsidy resulted in subsidizing the healthcare insurance industry.

UnitedHealthcare paid AARP $4 billion dollars to be the only provider of AARP’s Medicare Part D plan. Would UnitedHealthcare do this if they thought they would lose money? No! Part D is supposed to be a plan subsiding drug benefits for seniors. The government is supposed to fix the premium for all seniors regardless of health risk.

Last year UnitedHealthcare’s net income from Medicare Part D was over $1 billion dollars. UnitedHealthcare expects this net income to increase in the future as more baby boomers qualify for coverage. Despite all the profit from Medicare Part D next year the premium for seniors is going to increase from $25 to $28 per month per senior in post tax dollars.

The government does not negotiate directly with the pharmaceutical companies for drug prices as it does in the VA and Military healthcare systems. The healthcare insurance industry does the negotiating. The prices set are non transparent.

If the government wanted to be effective it would do its own negotiating. However, this does not seem to be the bureaucracy’s way. This is one of the reasons the government should not be a single party payer.

Medicare’s drug plans will cost beneficiaries an average of $28 a month in 2009, about $3 more monthly than this year, according to the U.S. health-care program for the elderly.”

This increase represents an 11.5% increase from the previous year monthly cost of $25. It brings up the question again as to whether we can trust our politicians to look after our welfare and not the welfare of a secondary stakeholder?

Premiums paid by beneficiaries for basic prescription plans cover about one-fourth of the program’s cost, with the government paying the remainder, according to Medicare. Medicare will spend about $36 billion this year to subsidize drug coverage.”

This is ridiculous. A generic drug estradiol cost $4 a month in Wal-Mart outside the Medicare Part D system. Inside the Medicare Part D system the patients benefit (“Doughnut”) is charged $20. The patient’s co-pay is $4 for the generic estradiol. Does anyone think Wal-Mart charged the healthcare insurance company $18 for this prescription? Does anyone think the Healthcare insurance company didn’t charge CMS (Medicare) $18 plus an additional administrative fee for this prescription? All we are told is Medicare will spend about $36 million this year to subsidize drug coverage.  

Who is benefiting from all this money? In reality the government is subsidizing the healthcare insurance industry at a sizable profit. One can blame it on the Republicans. However it was a bipartisan bill with politicians being influenced by the vested interests of the healthcare insurance industry.

I have received many complaints about Medicare Part D. An outstanding complaint of a patient reaching the $2500 drug subsidy limit was a patient with glaucoma. The drops the patient was prescribed was not generic. The patient had a $65 co-pay. She paid this amount without noting the amount charged to her. After she paid $65 a month for 5 months she was out of drug coverage and into her Medicare Part D doughnut hole. She was charged $500 for her sixth month prescription. This was an out of pocket expense.

She complained to her ophthalmologist. Her ophthalmologist discovered that the retail price on the glucoma eyes drops was $90 for a one month supply bottle rather than $500 charged Medicare by the pharmacy. Her Medicare Part D account was charged $500 each month. She tried to complain but got nowhere. She did not receive a response from the healthcare insurance carrier or the government. The pharmacy said this was the price. They could not tell her how much the healthcare insurance company paid the pharmacy.

“The new estimates for Medicare Part D were based on bids submitted by companies that receive government subsidies to offer the plans.” “About 25.4 million Americans have drug coverage through Medicare, 17.7 million of them in standalone plans and 7.7 million in Medicare Advantage plans that provide health care through private insurers.”

My guess is the healthcare insurance companies make a greater net profit from Medicare Advantage than Medicare Part D because the subsidy is greater.

The point of these examples is the government will overpay the healthcare insurance companies and undercover patients for care. It continuously cuts the reimbursement to physicians while a facilitator stakeholder increases its profit.

George Bush recently proposed consumers pay for Medicare Part D on a means tested bases. He did not demand price transparency or cut the profit from the subsidy to the healthcare insurance industry.

“Republican President George W. Bush proposed raising the premiums paid by individuals earning more than $82,000 a year and married couples making more than $164,000. Democrats in Congress have said the government should have to power to negotiate directly with drug makers to hold down prices.”

Barack Obama plan will simply extend the charade. The only way to fix it is to have the consumer control their healthcare dollar and motivate him to use is healthcare dollar wisely.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • MedMan

    I couldn’t agree more with your conclusion. The problem starts with the moral hazards of insurance and government subsidy; so any solution will require consumers to have an increased financial stake in the system. We are trying to help consumers know what healthcare should cost at the Healthcare Blue Book ( Would like to know what you think of this resource. Thanks

  • Tinman

    What changes will occur with Obama’s plans to eliminate subsidies to Insurance Company’s for Medicare coverage? I am concerned because I have a member of our family who has COPD and takes Oxygen on a daily basis. Will the changes he wants to make continue to cover the oxygen he needs? Thank you for your help with this question.

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