Health Reform: Let's Work on Drug Costs and Premiums

Now that Washington is back at the drawing board, here are two big fixes that should be made.

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In his State of the Union address, President Obama vowed not to "walk away" from healthcare reform, though he was clearly chastened by the upset in Massachusetts that had swept Republican Scott Brown into the Senate, depriving Obama, at the 11th hour, of a signed bill before the speech. The legislation barely made it through each chamber, and the 60-vote victory on Christmas Eve in the Senate came without a vote to spare. The president did not reveal how he would move forward, but his rescue options are sorely limited. Still, whatever path he chooses, the walk provides a totally unexpected opportunity for the country: the chance to go back and make changes that would not have been possible before Massachusetts voters weighed in.

There are really only two paths forward, and both will take time. In the faster (and perhaps too clever) way, the House would pass the Senate bill untouched and send it to the president, bypassing the need for a final Senate vote that includes Brown. Secret negotiations are underway at both ends of Pennsylvania Avenue to modify the 2,700-page Senate monster to the House's liking—but any changes can be voted on only after the president signs the bill into law. The post-facto recasting would use a political gimmick, a process called reconciliation, that applies to budget issues and requires a simple majority vote (51 percent) rather than the supermajority (60 percent) often needed to pass controversial legislation in the Senate. If the House balks at this feat of legislative engineering, Congress will have to take a deep breath, step back, and fashion a more bipartisan bill.

Both scenarios mean that healthcare reform could still be made far more respectful of patients' individual choices and their pocketbooks—not just the federal purse. Let me suggest two big-ticket areas that badly need attention: prescription drug costs and insurance premiums. Both must be affordable, or a central goal of reform—ready healthcare for all—will never be achieved.

Pharmaceuticals: In the United States, medicines in exactly the same doses commonly run three to four times, and in some cases 10 times, prices in other places on the planet with drug-safety and approval systems like our own. The issue became hot in 2003, when older folks were caught boarding buses to Canada to buy their drugs at huge discounts. Rather than being cheered on by Uncle Sam for saving healthcare dollars, the renegades were threatened with confiscation of their "illegal" purchases. The federal government refused to relax the Food and Drug Administration's rules against citizens' importing drugs, even those obtained from perfectly legitimate pharmacies. And the consumers' revolt was vigorously opposed—surprise, surprise—by the drug companies, which lobbied heavily to continue to soak American taxpayers under the guise of safety. A bill to allow such drug imports, cosponsored by none other than Barack Obama when he was in the Senate, was roundly defeated.

[Read To Cut Healthcare Costs, Let's Start With the Secret Prices.]

Shortly after he was inaugurated, Obama vowed to bring down the cost of drugs by making it possible for Americans to fill prescriptions outside the country. It did not take long, however, for the special interests to entice him to cave. In a stunning surprise, given his legislative record and earlier promises, Obama made a backroom deal with the pharmaceutical lobby. Big Pharma would support Obamacare and even contribute $80 billion to the healthcare reform effort. The president would quash efforts in support of the citizen revolt.

Then, in mid-December, in one of the few bipartisan moves related to health reform, a majority of senators voted to amend the bill to allow Americans to buy drugs from Canada, Europe, Australia, New Zealand, and Japan. How could they not do so? The Congressional Budget Office had just estimated that the amendment would save the government almost $20 billion, and Democratic Sen. Byron Dorgan of North Dakota, who sponsored the bill, said it would lower patients' costs by $80 billion. The amendment did not get the 60 votes necessary to be added to the health reform bill, but a reconciliation strategy that needs only 51 votes, or a new bill fashioned from scratch, could and should get the gray panthers a win after all. Health reformers ought to place value on healthy competition, which, if allowed to flourish, can lower costs to individuals as well as to the U.S. Treasury.