William Chirolas -- World News Trust
Sept. 16, 2009 -- Obama promised in the campaign to give the federal government the authority to negotiate Medicare drug prices, but he does not seem upset that that is missing from the Senate Finance Committee bill.
Guess the drug companies need not worry about those billions of dollars in rebates that were going to payable because people were eligible for both Medicare and Medicaid. And regarding any cost-effectiveness subsidy paid by the government, forget about any consideration of cost.
There will be a board to compare the effectiveness of various drugs, but the decision on effective drug government subsidy will not consider the initial cost as that would be too competitive, I guess. Indeed rebates on generic drugs will be absorbed by the drug companies as they take the opportunity to raise the cost of those generic drugs. Of course we have that promise Obama obtained from the drug companies to decrease their profits by $8 Billion a year from what they are currently projecting, mainly by lower drug charges to a certain -- not all -- Medicare patients.
The Senate Finance bill does include a small excise tax on drug makers (and insurers, medical-device manufacturers, and clinical laboratories) that should generate $93 billion over 10 years along with a tax ($215 billion over 10 years) on high-end (worth more than than $8,000 a year for an individual or $21,000 for a family) “Cadillac” health plans (ignoring that for years unions traded wages for needed health coverage as where coal miners required plans in the "Cadillac" range because of coal dust) -- tax provisions that no doubt killed GOP support.
The amount companies have to pay in rebates for drugs increased in the bill to 13 percent from the current 11 percent for generic drugs, and to 23.1 percent from 15.1 percent for brand name drugs, but it is easy enough to raise the pre-sale price so you lose nothing. We do get self reported disclosure of drug company money (over $10) that might be seen as being used in a possible effort to influence physicians and hospitals in their choice of drugs -- with any company that doesn't report the payments facing fines of up to $1 million a year.
Baucus also dropped the employer mandate in the House bill that all employers offer health coverage or pay a penalty, replacing it with a requirement that companies with more than 50 full-time workers that don’t offer insurance pay a fee for every lower-income employee who qualifies for a new tax credit to obtain care, with a maximum penalty of $400 per worker and added a provision that health insurance providers collectively pay an annual fee of $6 billion starting in 2010, with other health companies making smaller collective payments. He continues the individual mandate even if your employer refuses to cover you with penalties of $950 per person or $3,800 per family each year, depending on income, but you get a small tax break, as will small businesses, to help make coverage more affordable, with for certain employers in 2011/12 getting a tax credit of up to 35 percent of their health care contributions, and in 2013, some small employers would get a two-year credit worth 50 percent of their contribution. Those are not deductions -- they are dollar for dollar credits.
Olympia Snowe is still not on board, saying, "A number of issues still need to be addressed -- including cost assumptions and ultimate affordability to both consumers and the government."
The House proposals ignore much in the Obama deal with the drug companies and has the public option, rather than the Senate Finance non-profits that can't get off the ground because they will not start with the Medicare network of care providers as something they can offer their members -- indeed they will have no network agreements to offer their members.
If the Obama bill is the Senate Finance bill, kill the bill as it is only massive welfare check to the insurers with the subsidy for premium payments, plus the forced sale of millions of new policies for those insurers due to the mandate.
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William Chirolas brings 40 years of real-world business experience in local, state, national, and international tax, pensions, and finance to the world of blogging. A graduate of MIT, he calls the Boston area home, except when visiting kids and grandkids.