(April 29) In his Wednesday night speech, President Joe Biden repeated one bit of economic illiteracy that has been demonstrably wrong for 15 years, although Democrats recited it like a magic incantation at a Gypsy roadshow.

“Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower prices for prescription drugs,” Biden said. “That won’t just help people on Medicare, it will lower prescription drug costs for everyone. The money we save can go to strengthen the Affordable Care Act, expand Medicare coverage and benefits, without costing taxpayers one additional penny.”

Every bit of this claim is flapdoodle spread on a baloney sandwich.

In terms of consumer pricing for prescription drugs, the Medicare Part D plan is one of the greatest public-policy success stories in the past quarter century. (Conservatives, not liberals, still have other gripes about the 2003 legislation that created the Medicare prescription program, but the actual consumer pricing has worked wonderfully.) Consider the history and the numbers.

When the bill was passed, Republicans insisted that having the government “negotiate” the prices would end up costing more while retarding the savings from market competition. Then in the congressional majority, they were able to reject Democratic entreaties for government negotiating and price-setting.

It’s a good thing they did. Government planners almost never understand the market. The original government estimate was that the average Part D premium would be $35 monthly. Democrats were so sure the rapacious drug and insurance companies would price-gouge that they proposed to set the base price at $35, with subsequent adjustments for inflation.

Tens of millions of seniors should be glad the Democrats didn’t prevail. The market worked far better even than Republicans had hoped. The initial average premium, when the program took full effect in 2006, was $25.93, a savings of 25% from the Democrats’ estimates….

[The rest of this column is at this link.]


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