ACTION

Since 2009, the Obama Administration — whether intentionally or not — has been crippling the well-being of our senior citizens. Under the fiscal irresponsibility of Obama’s reign, inflation has risen by over 12%, leaving seniors on fixed incomes with less money in their wallets and purses. Last year, Obama’s budget deal extorted $150 billion from the Social Security trust fund in order to finance other areas of the budget. And now, Obama is planning his most egregious action yet — he wants to meddle with the elderly’s Medicare benefits and impose a hidden tax on their drugs.

Medicare Part D, better known as the Medicare prescription drug benefit, is a federal government program that subsidizes the costs of prescription drugs for Medicare beneficiaries.  While there is plenty for conservatives to not like about the program, it has at least brought free market prices back to the drug industry. Although Part D drugs are subsidized, prices are still determined through private negotiations between insurers and pharmaceutical companies. And, since the prices are negotiated through the private sector, costs have successfully spiraled downward. In fact, seniors can now often purchase drugs at a 30  percent discount from their originally marked prices. The cost-effectiveness of the drug benefit program has actually exceeded expectations —  to date, it has only cost taxpayers 55 percent of what it was originally budgeted for.

Although Medicare Part D has thrived under the restraints of private market forces, the White House is requesting that the public sector intervene in the program. In his recent budget proposal, President Obama asked that Congress repeal the non-interference provision, a clause which inhibits the U.S. Department of Health and Human Services (HHS) from interfering in Medicare Part D price negotiations. 

Translation: Obama is asking Congress to price-fix Medicare Part D drugs. If this country’s last two generations of senior citizens have learned anything, it’s that price-fixing never works  — it always leads to problems, normally shortages of the given product. We saw this with food during World War II and gas during the Jimmy Carter Administration. By setting the price of these goods artificially low, demand skyrocketed, causing their supply to run out. 

Price-fixing is not something that we can afford to let happen in the drug industry. Senior citizens need their medicine — they are dependent on it for survival. Interfering with the free market in the drug industry is not just bad economics, it also jeopardizes the health and safety of millions.

But President Obama’s budget proposal won’t just price-fix drugs, it will also impose a hidden drug tax on senior citizens. Obama requested that pharmaceutical companies return up to 40 percent of their sales back to Medicare. Unfortunately, this “gift” to Social Security will result in drug makers selling their goods at a loss, causing them to peddle the difference onto consumers. Prices will rise, and seniors will have less money in their already cash-strapped pockets.

Clearly, the potential effects of this Obama budget proposal are staggering. Thankfully, the conservative intellectual class is onto Obama’s Medicare schemes, and they’re doing everything they can to stop them. Last week, 26 leading conservative organizations, including Americans for Prosperity, the American Conservative Union, and the Center for Freedom and Prosperity, sent a joint letter to Congress cautioning the body from adopting the Obama Administration’s fiscally irresponsible Medicare Part D plan.

“Government forcing companies to turn money over to the Treasury is not a rebate, it’s a tax,” the coalition letter stated. “This tax will have a significant impact on the market. Drug companies will respond by embedding the cost of the tax in the price of their drugs, driving up the total cost of insurance. Increasing the price of insurance—due to direct government involvement—is a de facto tax increase on America’s seniors.”

While conservative advocacy groups outspoken opposition to this budget proposal will certainly be helpful in striking down these Medicare Part D provisions, the proposal’s fate lies in ultimately lies in the hands of the Republican-controlled Congress. The GOP holds a comfortable majority in both the House and the Senate — it can easily stop this fiscally irresponsible bill if it wants to. America’s seniors are counting on them to do so.