by James C. Capretta
e21 – Economic Policies for the 21st Century
September 23, 2013
As the political back and forth over Obamacare intensified this summer, it largely went overlooked that the Medicare prescription drug benefit continues to outperform expectations. In July, the Department of Health and Human Services (HHS) announced that the average premium for the drug benefit in 2014 would be just $31. HHS also announced that the standard deductible would fall from $325 in 2013 to $310 in 2014. What accounts for this remarkable record? The Medicare drug benefit works because it is a market-driven program. Unlike the rest of Medicare, in the drug benefit the federal government does not set the prices. Instead, private plans compete with each other and submit bids to the government indicating the premium they will charge to provide insurance coverage for prescription drugs.