Medicare Part D, which covers prescription drugs for the elderly, spent $62 billion last calendar year.
With expected growth in drug prices and increased enrollment, total spending in Medicare Part D will average $111 billion per year over the next decade.
Nationwide, prescription drug spending last year is estimated to be $328 billion among all payers including private insurance, Medicare Part D, and patients’ out-of-pocket expenses.
Medicare Part D provided benefits for 41 million seniors last year, according to the Congressional Budget Office. That’s expected to grow to 58 million by the end of the decade.
Federal law currently prohibits the Secretary of Health and Human Services from negotiating prescription drug prices. Only Congress has the power to change this law.
Allowing the Secretary only to negotiate prices - without providing another tool to reduce prices - would not save a meaningful amount.
The Congressional Budget Office (CBO) estimates that giving the Secretary authority only to negotiate prices will not generate significant savings unless the Secretary can also remove certain drugs from coverage or otherwise legally require reductions in prices.
The President’s budget estimates that Medicare Part D would save nothing under the President’s proposal to give the Secretary authority to negotiate prices for high cost prescription drugs.
If the Secretary were allowed to require brand-name drug manufacturers to lower the price of their drugs, Medicare Part D could save on average $11 billion per year, according to CBO.
For more information, contact Patrick Newton, press secretary, at email@example.com.
McCrery-Pomeroy SSDI Solutions Initiative Releases Recommendations to Improve Social Security Disability Insurance
• The Social Security Trustees estimate that reducing benefits to restore solvency would require an immediate 16.4 percent benefit cut – the equivalent of reducing benefits this year by more than $150 billion.
• According to the Social Security Administration’s Inspector General, in 2013 just over 1,500 deceased individuals in all age ranges were still receiving benefits. They account for only $15 million in improper benefit payments.
• A 2015 report found 6.5 million active Social Security numbers for people over the age of 112 – but only 13 of them were being used to receive benefits.
• According to the Social Security Administration, all improper payments, including payments to the deceased and the very old, are estimated at about $3 billion per year.
• Total Social Security benefits in 2016 will exceed $900 billion, so eliminating $3 billion per year of improper payments would reduce costs by at most 0.4 percent, extending the program’s solvency by about 3 months.
• Cutting improper payments for only the very old or the deceased would reduce program costs by between 0.00002 and 0.002 percent, extending the program’s solvency by between six minutes and 12 hours.
Since faster economic growth would represent a boon for wages and the fiscal situation, a number of Presidential candidates have been promising or assuming it on the campaign trail. For example:
- Ted Cruz: “America can get to 5 percent growth.”
- Donald Trump: “We are looking at a 3 percent but we think it could be 5 [percent] or even 6 [percent]. We are going to have growth that will be tremendous”.
- Analysis supported by campaign staff of Bernie Sanders: “The growth rate of the real gross domestic product will rise from 2.1% per annum to 5.3%”
These diverge quite substantially from projected growth and even economic history:
- The Congressional Budget Office (CBO) projects real (inflation-adjusted) growth will average 2.1 percent over the next decade.1 The Blue Chip projection is for 2.2 percent.2
- Since 1947, the average rate of US economic growth has been 3.2 percent; growth is expected to be about 1 percent lower than that due to slower labor force growth (mainly from population aging).3
- In the post-war era, there has never been a period of 10 consecutive years that have averaged 5 percent GDP growth.
- The record was 4.9 percent from 1958 to 1967 (due to recovery from the 1958 recession, the post-war economic boom, and the Kennedy-era tax cuts in 1964)
- Since 1973, there has not been a 10-year period that has averaged even 4 percent growth.
- The contemporary example of a booming economy, the technological revolution of the 1990s, averaged about 3.5 percent growth – driven in part by demographics and a dot-com bubble.
- Adding together all pro-growth policies estimated by the official scoring agencies would at most increase annual economic growth to about 3 percent.4
For more information or to speak with a CRFB expert, contact firstname.lastname@example.org.
1 CBO projects the economic situation assuming a current law baseline in which Congress meets its obligations but does not change the law. For the purposes of this short analysis, growth refers to real (inflation-adjusted) Gross Domestic Product (GDP) growth, considered widely to be the most relevant measure of the size of the economy.
2 The Blue Chip projection is an average of 50+ independent macroeconomic forecasts that vary by modeling method and assumptions. http://www.wklawbusiness.com/product-family/blue-chip
3 Simple average of the annual growth rates from 1948 to 2015.
4 Tax reform will likely only be able to increase growth by 0.02 to 0.5 percent per year, according to official estimates from the Joint Committee on Taxation and the Treasury Department. According to CBO’s most recent estimate, repealing the Affordable Care Act could increase growth by less than 0.1 percent per year. CBO estimated that the Senate’s immigration reform bill in 2013 could increase growth by up to 0.3 percent a year. In CBO’s long-term budget outlook, they calculate that a $4 trillion deficit reduction package would have positive economic returns of around 0.1 percent yearly on, average, over ten years. In total this could add about 1 percentage point to the growth rate that CBO projects of about 2.1 percent, bringing average growth to around 3 percent.