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Editorial: Two Medicare Tales: One Positive, One Not

Free market economist Adam Smith might have been able to predict it, but there’s one place where health costs are not going up.

For the second time since the Medicare Part D prescription drug benefit was introduced in 2006, the average price for a drug plan is decreasing.

Part D is a privately administered, government-subsidized prescription plan for seniors and others on Medicare that was created under the Bush administration. In 2012, the average plan will cost about $30 a month, down from $30.76 this year.


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The program costs far less than budget analysts had predicted — a rare event in itself — attributed largely to competition among private plans and the growing use of generic drugs.

Meanwhile, over in the bureaucratic morass of fee-for-service Medicare, angry hospital administrators are complaining about “a money grab” provision buried in a regulation issued last week.

That little stinker, co-sponsored by Sen. John Kerry, D-Mass., is expected to direct $275 million a year to Massachusetts at the expense of other states.

The move will cost New Mexico about $1.6 million; New York will lose $47.5 million. Thanks, John.

Basically, the amendment requires Medicare to reimburse all Massachusetts hospitals for employee wages minimally at the rate it reimburses Nantucket Cottage Hospital. Wages on the island are high because of its status as an upmarket destination for wealthy people.

Changing Nantucket’s status to rural hospital — now the only one in Massachusetts — made this possible, as Medicare requires a state’s urban hospitals to be reimbursed for wages at least as high as rural hospitals.

Provisions in Kerry’s amendment mean any increase for Massachusetts requires a decrease for other states.

That’s some contrast in results between private enterprise and government politicking.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.