State Savings with an Efficient Medicare Prescription Drug Benefit
AbstractAmericans pay far higher prices for prescription drugs than do people in other wealthy countries. The reason that other countries spend so much less on drugs is that their governments negotiate prices with the pharmaceutical industry. The United States government could adopt the same approach with the Medicare drug program and use its market leverage to negotiate the same, or even lower, prices as are paid by other wealthy nations. This issue brief finds the potential savings to states would be enormous, cumulatively between $31 billion and $73 billion over 10 years, and also each state individually could expect significant savings. California leads the way, with potential savings between $3.3 and $7.8 billion. The next six top-saving states are Florida, New York, Texas, Pennsylvania, Ohio and Illinois, all with projected savings of at least $1 billion per year. Even those states with the least potential savings, such as Wyoming, North Dakota and Vermont, would still save tens of millions of dollars over a decade.
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Bibliographic InfoPaper provided by Center for Economic and Policy Research (CEPR) in its series CEPR Reports and Issue Briefs with number 2013-08.
Length: 3 pages
Date of creation: Mar 2013
Date of revision:
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Medicare; medicare drug benefit; prescription drug; Dean Baker; hospital insurance; pharmaceutical industry; private insurers;
Find related papers by JEL classification:
- I - Health, Education, and Welfare
- I1 - Health, Education, and Welfare - - Health
- I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
- I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- H - Public Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-05 (All new papers)
- NEP-HEA-2013-05-05 (Health Economics)
- NEP-IAS-2013-05-05 (Insurance Economics)
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