Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
WASHINGTON, Feb. 28 -- Rep. Joseph R. Pitts, R-Pa. (16th CD), issued the following op-ed:
Last year, President Obama's "If you like it, you can keep it" claim about health insurance was labeled the lie of the year by Politifact. You would think the administration would do everything they can to avoid taking away anymore benefits that American's like and enjoy.
Astonishingly though, the Centers for Medicare and Medicaid Services is advancing new rules that would eliminate the current Medicare prescription drug plan for millions of seniors.
The Medicare prescription drug plan was created under the leadership of Congressional Republicans and President George W. Bush in 2003. The program started offering plans to seniors in 2006.
By almost any measure, it is a big success. Nine out of ten seniors are satisfied with their plan. In nine years, the basic premium has only risen 22 cents. In some of the intervening years, the premium actually went down. The cost of the program to the government is 45 percent lower than the Congressional Budget Office projected in 2003. How many other government programs are popular, affordable, and under budget?
So, why is the program coming in so far under budget? The CBO didn't take into account just how well competition and choice would work to keep costs low. The program was designed to offer seniors a variety of plans to choose from. These plans compete for seniors' business by keeping costs low and offering attractive services.
Without any direction from Congress, the administration has undertaken a radical rewrite of the rules governing the program. These rules reduce choices in the program and could also reduce access to critical drugs.
The new rules could reduce the number of plans available to seniors to as few as two per region. Nationally 14 million seniors could lose their current plan. In Pennsylvania alone, more than 100,000 could lose access to their plan.
The rules modify the protected classes of drugs currently included in the program. This could mean certain drugs would be unavailable to all seniors in all plans. AIDS patients and those dealing with mental illness could have fewer options for treatment.
I recently held a hearing at the Energy and Commerce Health Subcommittee to ask the government official in charge of the rules rewrite why they are trying to mess with success. I found many of his answers to be evasive and the legal justification for the changes highly suspect.
The witness cited the number of complaints Medicare receives about prescription drug plans as one of their reasons for these changes. Annually, they receive about 30,000 complaints.
However, Douglas Holtz-Eakin, former Congressional Budget Office director and another one of our witnesses, pointed out that this represents less than one-tenth of one percent of all people in the plans. This is an extraordinarily low rate of complaints and is just as much of a reason to reject the new rules. How many seniors will call Medicare and complain when their plan is eliminated?
The government witness also cited increased costs in the future as a reason for the changes. But he also admitted that they had failed to analyze all aspects of the new rules. In fact, a private study by the actuarial firm Milliman estimated the government would spend up to $1.6 billion more on the program next year if the rules go forward.
The legal basis for the new rules is on shaky ground. Just a few years ago, a report from the Health and Human Services Inspector General explicitly said that the government could not do many of the things this rule would empower it to do today. When I confronted the government witness with this report, he indicated that he had not read it or considered it.
As with many of the changes made to Obamacare, the administration is ignoring the plain letter of the law. For years now, Medicare's prescription drug benefit has done an excellent job serving seniors. Currently, more than 260 groups of patients, doctors, and pharmacies have written in opposition to the new rules.
If it's not broke, don't fix it. I hope that the administration will hear these pleas and withdraw the rules on their own. If not, Congress will act to stop these changes from hurting seniors.
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