Trump Does it Again – Helps Seniors, Lowers Drug Prices, Rebuffs Congress

Posted on Wednesday, April 10, 2019
by AMAC, Robert B. Charles

Good news for seniors keeps coming.  Beyond a robust economy and low inflation, other measures of future satisfaction are rising.  Specifically, the Trump Administration is making good on another promise.  It is moving to lower drug prices by implementing a “proposed ban on certain pharmaceutical-industry rebates in Medicare,” according to the Wall Street Journal.  This move is bold, significant and overdue.

Phase one was reported several weeks ago, an intention.  Phase two is action.  The Trump team seems not to waste much time. In effect, while the administration would offer risk mitigation to health insurance companies, they would no longer allow rebates on fixed drug prices charge to store-front providers of prescription drugs. 

These rebates were seldom passed along to consumers, which meant middle men got benefits, but consumers – many of whom were older Americans – just paid the bigger bills.  That will now stop, rather abruptly.  By offering risk mitigation, the Administration aims to keep premiums from rising as insurers no longer benefit from rebates. 

Who will pay for the risk mitigation that now lowers costs for older Americans at the drug store or pharmacy window?  As rebates are banned and insurers forced to become transparent and accountable, ending the fake world where insurers charged higher prices to consumers for which they the insurer got a rebate, who will cover the transitional costs? 

In truth, the federal government – which means those in prime tax paying years.  But while not perfect, this keeps the costs to seniors down, and sets up a more transparent system in which those young now will later pay more fair and open prices ahead. 

Rather ironically, Democrats do not like this Trump plan, not because it costs federal money in the transition or because it helps seniors pay for necessary prescription drugs, but because it ends a cozy deal they like.  It creates new efficiencies in distribution that may reduce the need for Obamacare subsidies, restore free market forces, and undercuts the profit for some health insurers. 

To be specific, the Wall Street Journal reports that, “the rule would half billions of dollars in discounts that drug-makers give insurers and companies such as CVS Health Corp. and UnitedHealth Group Inc. that administer Medicare prescription plans.”  By contrast, the Secretary of HHS reportedly believes “it would spur makers to pass discounts directly to patients and bring new transparency to drug markets.”

All this raises a more prosaic question:  Who is really fighting for the little guy?  One would have to say, in this context, the President is doing that – as the Democrat majority in the US House resists, either because they do not get it,  do not want to get it, will not support a good idea coming from the Administration, or perhaps get campaign donations from those who oppose the idea. 

In the event readers this last link too attenuated, the Center for Responsive Politics reports that Nancy Pelosi received from Health Professionals nearly $300,000 total in the last cycle, and among contributors were name-recognized members of healthcare’s corporate community. 

Net-net, the reality is plain, persistent and encouraging.  The President is again focused on helping elder Americans, especially when it comes to health care.  He is seeking to lower drug prices, and even in the latest Washington flap about Obamacare’s judicial future, was quick to point out that – no matter what the courts decide, he will support coverage for preexisting conditions.  In the end, good news tends to get crowded out by the bad, but President Trump keeps making good news – and this is just a little more.  If history is won by inches, we just gained a few.  That is reason to smile.