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POLICY: Medicare bill passes

So it’s done. The Medicare bill passed the Senate this morning 54-44 with the votes of enough conservative Democrats to ensure an easy passage. My suspicion is that there’s a lot less here than meets the eye. However, Tom Daschle (who’s continued tenure as Minority leader in the Senate is already in doubt) was the first to notice that 

    "This is not the final vote. This is the beginning of the end; it is not the end. We will see many many more votes. I predict that we will be back within the next 12 months. Seniors will demand that we respond to the many deficiencies of this bill, and they will not rest until we address them.”

I don’t think it’s necessarily 12 months, but there’ll certainly be many more attempts to amend Medicare in the next 1-6 years. We won’t see the program left alone as we have for the last 6 years. However as several of the cooler heads in the health care blogsphere have been commenting, the drug benefit is relatively limited, the competition and premium support aspects are minor tinkering (for the moment!), and the boost to the program in terms of budget will eventually need cuts elsewhere or new funding sources. The important questions are:

    1. While this is an immediate win for the Republicans, as the news filters out about what’s actually in the program, who wins politically out of this in the next 12 months? My suspicion is that this bill is net bad for enough seniors that the Democrats do. Of course given Iraq et al it may not matter.
    2. How much does the pharma and PBM industry benefit? Again this depends on the details of the implementation. Particularly how over time who aggressive will the government force the PBMs to be with the pharmas on price? Volume will clearly go up.  Will prices come down to match or not much?
    3. Will employers maintain their drug benefits for their retirees? That’s the question that both matters most politically and also determines to some extent how popular and therefore how expensive the drug benefit will be.

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