Earlier this week, Sen. Kennedy and Stabenow introduced a bill that, similar to the  Medicare Prescription Drug Savings and Choice act that the House Dems have united around, would create a Medicare-run plan and have price negotiation.  But, this new bill also goes further in eliminating the so-called “doughnut hole”.  This brings up an interesting political discussion that I would love to get feedback from TPM Café readers on. 

Most activists agree that we need a clear alternative to the Republican Part D disaster.  Most people also clearly agree that having a Medicare run plan and negotiating prices would be a good first step toward fixing Part D.  But the tricky part, and where I disagree with Sen. Stabenow and Kennedy, comes in eliminating the doughnut hole.  Not that I like the doughnut hole, it’s a terrible policy to intentionally design such a gap in coverage that will hit Seniors hard in the middle of the year.  I am 110% supportive of eliminating the doughnut hole completely. 

However, my critique is more tactical in the way the new bill proposes to do it.  By mandating the elimination of the doughnut hole, one automatically increases the already high cost of this benefit.  This weakens the appeal of the bill to moderate Dems and the few remaining fiscally conservative Republicans.  It also gives the GOP the one talking point they could cling onto against this common sense proposal.

By contrast, the Durbin bill (and the House Dem bill) would still close the doughnut hole but with more stealth.  In this version, the savings from having a Medicare run benefit with negotiated prices would be used to help plug in the gap.  Since its not mandating the hole be fixed, but uses the savings from its provisions to close the gap, there is no way anyone can say it will raise costs.  And with the savings from a Medicare run benefit competing side-by-side with private insurance plans having been estimated at $40 billion to $65 billion per year, there would be enough funds to pretty much eliminate the doughnut hole. 

It seems to me like the Durbin bill would be the better way to go, especially with the House Dems pretty united on it.  Although there would be advantages in being able to clearly tell Seniors that the Dems are trying to eliminate the doughnut hole.   What to others think about these different legislative fixes toward the Part D disaster?