President Trump needs a win on health care, and prescription drug costs are in the crosshairs. He issued an executive order to eliminate drug rebates paid to Medicare Part D plans, claiming that this would save seniors billions of dollars. To ensure that costs won’t pop up elsewhere, the order directs Health and Human Services (HHS) Secretary Alex Azar to confirm that premiums, out-of-pocket costs, and federal spending would not increase.
That will be difficult to pull off. Two years ago, actuaries from the Centers for Medicare and Medicaid Services (CMS) took a hard look at the rebate ban. They estimated that seniors would pay less for their prescriptions but both Part D premiums and federal spending would increase by billions of dollars. That analysis is likely to stand. The executive order creates a conflict between the aspirations of the President’s policy and the realities of the market.
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