The agreement reached in Congress around the fiscal cliff crisis fell far short of raising the revenue needed to address the budget deficit woes in D.C. The debate will now shift into a more single-minded focus on cuts, and it is increasingly clear this fight over the deficit will become more heated and intense during the coming months. Everything will be on the table for discussion. The Obama administration is already talking about cuts to health care, and critical programs like Medicaid will certainly be targeted during those discussions. A lot of numbers will be thrown around. But it is important we remember: A lot more than numbers are at stake — health care for millions is one of the key investments hanging in the balance.
At the heart of the fight will be whether to find more ways to increase revenue, or to slash critical programs that families depend on for their health and economic well-being. If Congress caves to the vicious drive of House Republicans to decimate vital public health insurance programs like Medicaid and Medicare, we will all pay the price.
Cutting Medicaid and Medicare would lead to devastating results. Imagine, for example, the effects of lost nursing home care, lost asthma medication and lost breast cancer treatment. Disproportionately, those hurt will be people of color. However, these cuts would harm everyone, because the loss in dollars will take a toll on jobs and economic growth when we need them the most.
If House Republicans and other members of Congress are serious about cutting health care costs, there are alternatives to cuts that harm Medicaid and Medicare recipients. For instance, let’s bring pharmaceutical companies to the table to negotiate lower drug prices. Americans pay more for prescriptions than any other nation — someone in New Zealand pays a third less. Medicaid and Medicare beneficiaries pay more for their prescriptions than do our veterans and clients of the National Indian Health Service. Why do these differences exist? Because the VA and the IHS — not to mention every other developed country in the world — negotiate the prices for prescriptions, while we do not for Medicaid and Medicare.
Tremendous cost savings can be achieved by leveraging the mass purchasing power of Medicaid and Medicare. According to the Center for Economic and Policy Research, savings to the federal government over the next decade would be as high as $541.3 billion. The savings to the states would be as high as $72.7 billion, and beneficiaries would save $112.4 billion. These amounts are far in excess of the demand for expenditure reductions being suggested by the most strident deficit reduction advocates.
Sadly, while the pharmaceutical lobby can afford to negotiate, the industry is spending millions not to. The top 10 pharmaceutical companies alone raked in over $43 billion in profits in 2011. With skyrocketing demand from 32 million people entering the insurance market in 2014 thanks to health care reform, their profits will only climb.
It’s not surprising the industry is spending hundreds of millions of dollars buying influence in the Beltway to keep drug prices high. Pharmaceutical companies spent nearly $153 million on lobbying in 2011; they employ 876 lobbyists, equal to nearly two for each member of Congress; and they made $14.7 million in contributions through the 2012 election cycle.
It’s time for Congress to do the right thing and make pharmaceutical companies pay their share.
If the pushing and shoving of budget negotiations leave Congress no option other than to make cuts to these programs, those cuts must come from drug costs rather than from changes in eligibility age or benefits to consumers. With the savings garnered from lower drug prices, we will be able to sustain and grow the investments that make our country healthy and productive.
These are more than just dollars-and-cents decisions. They are also choices about who matters in our country. I do not believe that corporations and the super-rich are all that matter. It’s time for members of Congress to show they agree.
Leon Burzynski, of Pewaukee, is president of the Wisconsin Alliance for Retired Americans, a nonprofit organization representing over 107,000 Wisconsin retirees.