In 2003, the Medicare Prescription Improvement and Modernization Act also known as MMA was enacted. The Act provided a prescription drug benefit plan titled Part D. The legislation provides voluntary drug benefits. The bill that begun to cover the costs of prescription drugs came into effect in 2006, partly administered by private insurance companies offering Medicare-approved prescription plans (PDPs), and Medicare Advantage plans. Like any policy-making process, the formulation of the bill attracted a lot of interest from various stakeholders with vested interest in the legislation. The passing of Medicare Part D is, therefore, indicative of the power and influence lobbying has on healthcare policies. The passing of the legislation is also indicative of the influences of the abuse of political power. The passage of the legislation- a flawed bill that prevents Medicare from negotiating for lower drug prices with pharmaceutical companies- is, therefore, indicative of the negative influences political agendas and lobbying interests has on public healthcare policies. Intense Congressional and pharmaceutical lobbying led to the passage of the bill thereby confirming how public policy can be used for both political and financial gains at the expense of the citizens. However, despite the shortcoming of the bill, it accords the elderly an opportunity to access affordable healthcare as they near their sunset years.
Why Did Part D Pass?
Following the enactment of the legislation in 2003, Part D has accorded the most vulnerable population- the elderly- affordable prescription coverage that was traditionally left out under Parts A and B. The drug benefits are administered through prescription drug plans (PDP) for the beneficiaries who elect to remain under traditional Parts A and B, or through Medicare Advantage care plans that have incorporated Medicare Parts and B benefits (Drotleff, 2006). Despite opposition from various interest groups and stakeholders, the bill passed probably due to the strategy the Bush administration employed by following the Democrats concerns and making inroads with the elderly voters. After much funding from pharmaceutical lobbies, the Democrats had no option but to concede. Moreover, despite much opposition challenging the idea of restricting drug prices and allowing cheap importation of medicines by pharmaceutical companies, the Bill still managed to sail through in the house. This was due to a lot of intense lobbying of legislators- who felt that government should not intervene on drug prices but should instead leave market forces to control pricing- by pharmaceutical companies.
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The influences of the Stakeholders on the policy-making process
The policy-making process that led to the enactment of Part D involved various stakeholders such as the American Hospital Association (AHA), American Association of Retired Persons (AARP), health insurers, political players, white house, media, and pharmaceutical companies (Mooneser, 2013). AHA expressed fears about the bill with amid fears that the Obama administration would have withdrawn Medicare and Medicaid provider rates, a move that they feared would result in loss of 200000 jobs. AAPR supported the bill due to the advantage that it would accord to its members. Despite the opposition from various pharmaceutical companies who raised concerns about pricing, they still supported the bill due to its long-term financial benefits. The Bush administration supported because they had a goal of providing affordable health care to the vulnerable especially the elderly.
Strategies and Tools
Informational, procedural, and compensation strategies were implemented during the policy-making process. The use of informational strategies included the creation of public awareness through the media, campaigns, surveys, and political forums to inform the public that Part D was in the policy-making state. Procedural strategies included political debates between the various political stakeholders to garner support for the passing of the bill. This included the creation of guidelines and protocols that govern the coverage of the legislation. Compensation strategies that were in play involved clearly identify the benefits of the bill first to the elderly, then the various stakeholders including the government, pharmaceutical companies, insurance companies in terms of the potential profits and revenues (Mooneser, 2013). For example, eight years after the enactment of the bill, pharmaceutical, and insurance companies benefitted the most cashing more than $139 million in profits.
Shortcomings of Part D
A major drawback with the legislation was how it fragmented the Medicare’s potential purchasing power into smaller entities. The fragmentation led to a lack of negotiating power with the pharmaceutical companies on drug prices leaving the drug companies with near monopoly on pricing leading to the price of prescription drugs being the highest in the world. Attempts to amend the legislation did not bear fruit following its enactment partly due to a lack of political power by the Democrats as well as continued opposition by the Bush administration since doing so would have given Medicare the necessary power to negotiate prices.
Political Influence
The Bush administration had projected the largest budget deficit in American history in 2003. Projections by the Congressional budget review had indicated a $457 billion for the fiscal year 2014. With an election on the horizons the following year, the administration came up with Medicare with the aim of winning the American senior's vote. The estimated cost of Part D. that was given to Congress indicated close to $395 billion for the first ten years. However, the administration knew that the projections were incorrect but decided to suppress the figures before the enactment of the legislation. Estimates by Medicare’s chief actuary, Richard Foster, exceeded $535 billion mark but were never made public before the enactment of the legislation since the congressional budget resolution had capped the figure at $400 billion due to threats from Thomas Scully of the Department of Health. Had the figures been made public, then it would have taken a single member of Congress or Senate to stop its passage by a point of order.
Also, a lot of undue influence was exacted on Congress to enact the bill. Despite the Republican Party being the majority in the House of Representative, the bill was losing by 216 to 218 in the final vote. However, the vote was kept open for close to 3 hours despite the law allowing on fifteen minutes for voting to come to an end. This time was used to exert pressure on Republicans to change their vote leading to the outcome of 220 to 215 for Part D. The result was a massive gain for the Republican Party in the elections that followed.
Pharmaceutical Lobbying
The policy’s formulation was a creation of lobbyists rather than non-partisan analysts. Intense lobbying by pharmaceutical companies led to the creation of the bill. A total of $325 million was spent by the healthcare industry to influence Congress to pass the bill. Drug companies contributed close to $87 million. Families USA, a leading voice for consumers of healthcare products spent $40,000. The lobbying effort finally paid off with pharmaceutical companies carrying the day with the passing of the bill. Efforts by the AARP to influence the bill for healthcare consumers did not bear fruit since it had divided loyalty (Haber, 2013). The passage of the bill resulted in massive gains for its key proponents.
AARP together with its partner company United Healthcare Insurance Company benefited by becoming the number one medication insurance provider under Part D. John Mc Manus, a Congressional aide who assisted in the crafting of the bill formed his lobbying firm after the bill’s passage and received a total of $620000 from drug companies. Thomas Scully, a key hospital lobbyist before his appointment ended up as Medicare’s chief administrator upon leaving government.
Representative Billy Tauzin became the president of key industry lobby, Pharmaceutical Research and Manufacturers of America (PhRMA), with a hefty annual pay check estimated at $2million (Haber, 2013). Such is the power of pharmaceutical lobby and its influence on healthcare policies. It promotes legislation that is beneficial to drug companies at the expense of consumers of healthcare products. The crafters of the bill deliberately made it unlawful for Medicare to negotiate lower drug prices in order to protect the profits that would flow into big drug companies due to the millions of new customers added by Part D. The passing of the bill spelt defeat of reform measures that would have legalized the importation of cheap drugs, ensure government control on drug prices, and allow access to cheap generic drugs.
Policy and Politics
Policy and policy-making go hand in hand. No policy-making and reform agendas exist devoid of political enemies. No single policy can be formulated in a political vacuum, but a clear distinction exists between what is constructive lobbying. Policies need to be formulated devoid of any pressure from lobbyists if they are to be effective in being beneficial to the members that depend on them. The policy-making process can and does accord policy-makers and stakeholders the opportunity to evaluate and reform policies. The passage of the bill did not come as a surprise since its enactment, and implementation is indicative of a larger political agenda. The problem seems to lie with American politics that needs immediate fixing for the enactment and implementation of beneficial policies (Lee, Gluck, & Curfman, 2016). The law was drafted by lobbyists with an agenda to control drug prices in the US. It ended up being the ticket that ensured the re-election of a president.
Intense power lobbying in Congress, pharmaceutical lobbying and strong-arm tactics ensured its passage in the floor of the House. Political handouts to its key proponents in the form of employment ensured Medicare remained toothless on pricing issues giving near monopoly to the pharmaceutical industry to determine drug prices at the expense of the intended beneficiaries. For the political system to be in a position to identify a problem and address it fully, makes the process a huge achievement. Part D, therefore, saw a need and attempted to address it. Despite its shortcomings, Part D was enacted and implemented to benefit the elderly primarily.
Part D was enacted and implemented amid a lot of lobbying both from government and pharmaceutical companies. The passing of the bill is an indication of how public policy can be used both for political as well as financial gain. The enacting and implementation of Part D ensured the re-election of the Bush administration having found favor with the elderly since the bill addresses an element that concerns their lives. Key proponents of the bill were also compensated with employment opportunities following the passing of the bill. The passage of the bill denied Medicare the crucial power needed to negotiate prices with pharmaceutical companies leading to drug companies near monopoly on pricing ultimately leading to high drug prices. However, such are the challenges facing any policy-making process. Each process has a lot of vested interests. However, most policy-making process offers the policy-makers and stakeholders the opportunity to iron out the problems that might surface upon implementation. Despite the shortcomings of Part D, the legislation identified a gap that it seeks to fill: the provision of affordable healthcare to the elderly.
References
Drotleff, E. A. (2006). The medicare part d prescription drug benefit: who wins and who loses? Marquette Elder's Advisor: 8(1). Retrieved from http://scholarship.law.marquette.edu/elders/vol8/iss1/7.
Haber, D. (2013). Health promotion and aging. New York City: Springer Publishing Company. 5th Ed. Print.
Lee, T. T., Gluck, R. A., Curfman, G. (2016). The politics of Medicare and drug-price negotiation. Health Affairs. Retrieved from http://healthaffairs.org/blog/2016/09/19/the-politics-of-medicare-and-drug-price-negotiation.
Moonesar, A. I. (2013). U.S. public health policy: A current briefing. 4 Station Ln Oxford: Chartridge Books Oxford. Print.
