Stark Challenges WSJ on Medicare

Should the Democrats take back control of Congress, Rep. Pete Stark (D-Cal.) will be in line to run the influential health subcommittee of the House Ways and Means Committee. That's good news for anyone concerned about accountability and cost-effectiveness in the nation's health care system. Here's a letter he wrote to the Wall Street Journal today. It provides solid talking points for anyone combating the arguments of those who believe that competition among insurers will succeed in holding down health care costs.

Privatizing Drives Up Cost Of Administering Medicare

Your Oct. 4 editorial "Markets and Medicare" implies that the private sector is more efficient than Medicare. Medicare trustees suggest the opposite, finding that administrative costs for the new prescription drug program's private drug plans average 12% -- six times Medicare's historic 2% ratio.

You also claim that "competition" is responsible for a decline in the drug program's cost. But these reductions are primarily a result of a trend of lower drug spending that is unrelated to Medicare.

And you allege that the Veterans Administration limits drug access. But the VA covers 16,000 prescription drugs on its formulary, and ensures access to other drugs when necessary. VA patient satisfaction is high and the VA negotiates price discounts far below those in Medicare's private plans.

On one point you are correct: I am unhappy with the GOP agenda to privatize Medicare. Why? At the behest of Republicans, the government now pays Medicare-sponsored HMOs and other private plans 11% more than would be spent in the traditional fee-for-service program. If the private sector is so efficient, why do we have to pay it more to do the job?

Rep. Pete Stark (D., Calif.)
Ranking Member
Ways and Means Subcommittee on Health
Washington