Smoke and Mirrors at HHS

SMOKE AND MIRRORS AT HHS….Good news, campers! The Department of Health and Human Services says the Medicare prescription plan is coming in under budget!

When the program was being developed, before we had any actual experience with the cost of drug coverage, it was estimated that the Part D benefit would cost about $700 billion in its first ten years. But as plans compete for seniors? business, they are driving the costs of prescriptions down. According to our latest estimates, the costs of the Medicare prescription drug benefit are significantly less than expected.

The federal government now projects the cost to be about 20 percent less per person in 2006. Over the next five years, payments are now projected to be more than 10 percent lower than first estimated. That is a significant savings for taxpayers.

Well. That is good news, isn’t it? Competition is certainly a wonderful thing.

And yet….something is niggling at me. You see, back when the program was being developed, HHS actually estimated it would cost $400 billion, not $700 billion. As we later learned, this was just a flat out lie, designed to fool Congress into voting for it. Shortly after the bill passed, HHS admitted that its chief actuary had actually estimated a cost of $500-600 billion but had been forbidden from revealing this to anyone. Then, last year, they upped the estimate again to $720 billion. So assuming that the 10% “savings” applies to the entire 10-year budgeting period, it means HHS is now estimating a cost of $650 billion, which is actually far higher than either of the estimates from two years ago.

It’s also worth noting that HHS has come up with this alleged 10% savings after a grand total of one month of experience with the program. In fact, it comes from a document called “The Secretary’s One Month Progress Report on the Medicare Prescription Drug Benefit.” So take this news with a great big shaker of salt.