{"id":185,"date":"2012-10-14T20:05:00","date_gmt":"2012-10-15T00:05:00","guid":{"rendered":"http:\/\/blog.cmhughesmd.com\/?p=185"},"modified":"2012-10-14T20:05:00","modified_gmt":"2012-10-15T00:05:00","slug":"what-if-medicares-drug-benefit-was-more-like-the-vas-the-incidental-economist","status":"publish","type":"post","link":"http:\/\/blog.cmhughesmd.com\/?p=185","title":{"rendered":"What if Medicare\u2019s drug benefit was more like the VA\u2019s? | The Incidental Economist"},"content":{"rendered":"<p><a href=\"http:\/\/theincidentaleconomist.com\/wordpress\/what-if-medicares-drug-benefit-was-more-like-the-vas\/\">What if Medicare\u2019s drug benefit was more like the VA\u2019s? | The Incidental Economist<\/a><\/p>\n<blockquote><p>Medicare\u2019s inability to negotiate program-wide prices and tighten  plan formularies is in stark contrast to the VA, which negotiates  directly with drug manufacturers and is not bound by the same formulary  rules as Part D plans. That\u2019s why the VA has been able to implement a  national formulary more restrictive than those of Medicare plans and  obtains lower drug prices.&nbsp;If Medicare plans could implement VA-like  formularies and obtain commensurately lower prices, our paper shows that  enough could be saved to compensate beneficiaries for the loss of  choice, with savings to spare.<\/p><\/blockquote>\n<blockquote><p>To repeat, the key findings are:<\/p><\/blockquote>\n<ul>\n<li>\n<blockquote><p>The VA pays 40% less than Medicare plans for&nbsp;prescription&nbsp;drugs.<\/p><\/blockquote>\n<\/li>\n<li>\n<blockquote><p>Medicare plans cover about 85% of the most popular 200 drugs on average (ranging from a low of 68% to a high of 93%).<\/p><\/blockquote>\n<\/li>\n<li>\n<blockquote><p>The VA\u2019s national formulary includes 59% of the most popular 200 drugs.<\/p><\/blockquote>\n<\/li>\n<li>\n<blockquote><p>If Medicare obtained the same drug prices as the VA, it would save  $510 per beneficiary per year or a total of $14 billion per year (2009  prices).<\/p><\/blockquote>\n<\/li>\n<li>\n<blockquote><p>If Medicare plans tightened formularies to the level of generosity  available from the VA (59% of top 200 drugs covered), beneficiaries  would lose $405 of value per year associated with the loss of choice of  drugs. (The right way to interpret this is that the average beneficiary  would be precisely indifferent between the loss of drug choice and $405  dollars in cash.)<\/p><\/blockquote>\n<\/li>\n<li>\n<blockquote><p>Because the savings ($510 per beneficiary) exceeds the loss of value  to beneficiaries ($405), they could, in principle, be made whole with  $105 left over (= $510 \u2013 $405).<\/p><\/blockquote>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>What if Medicare\u2019s drug benefit was more like the VA\u2019s? | The Incidental Economist Medicare\u2019s inability to negotiate program-wide prices and tighten plan formularies is in stark contrast to the &hellip; <a href=\"http:\/\/blog.cmhughesmd.com\/?p=185\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;What if Medicare\u2019s drug benefit was more like the VA\u2019s? | The Incidental Economist&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"sfsi_plus_gutenberg_text_before_share":"","sfsi_plus_gutenberg_show_text_before_share":"","sfsi_plus_gutenberg_icon_type":"","sfsi_plus_gutenberg_icon_alignemt":"","sfsi_plus_gutenburg_max_per_row":"","footnotes":""},"categories":[19,46,43],"tags":[],"class_list":["post-185","post","type-post","status-publish","format-standard","hentry","category-contrarian-economics","category-medicare","category-pharmaceutical-industry"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=\/wp\/v2\/posts\/185","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=185"}],"version-history":[{"count":0,"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=\/wp\/v2\/posts\/185\/revisions"}],"wp:attachment":[{"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=185"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=185"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.cmhughesmd.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}