Part D is the Free Market Beachhead in Medicare

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February 15, 2017 6:58 pm


[Download the letter here]

February 15, 2017


Medicare Part D has successfully used market mechanisms such as competition and consumer choice to improve access to affordable prescription drug coverage. As a result of market negotiations between insurers and pharmaceutical companies, in the first decade of program, total Part D costs were $349 billion less than projected estimates – an achievement unprecedented for a government program.

Those in the progressive movement remain ideologically opposed to the free market structure of Medicare Part D and are determined to undermine it. They continue to press for “mandatory rebates,” a government price control that could raise the premiums seniors pay by as much as 40 percent.

Additionally, demands for government negotiation of Medicare drug prices were once again included in President Obama’s 2017 budget and are a populist theme in presidential campaign rhetoric. Yet the Congressional Budget Office (CBO) has consistently stated that such a proposal would not score any savings, concluding that the government would not be able to negotiate prices that are more favorable than those obtained by current free market negotiations, unless they were to also restrict access to needed medicines.

In support of government negotiation, proponents often mention the Veteran’s Administration as a model of comparison. Mia Heck, Director of the American Legislative Exchange Council’s Health and Human Services Task Force has noted that the VA “employs a process of ‘negotiation’ that is founded on restricting access to newer and more effective treatment for veterans. What typically makes the final formulary is the cheapest option for the Department, and does not include many of the exciting, more promising medical innovations that have recently come to market.” A 2015 analysis by Avalere Health notes that the VA National Formulary does not offer access to nearly one-fifth of the top 200 most commonly prescribed Medicare Part D drugs. We reject rationing as an appropriate means of achieving savings.

Another assault on Part D has been proposing to force Medicare beneficiaries who receive the low income subsidy (LIS) to accept generic drugs despite what their physician deems most clinically appropriate. We reject the principle, so prominently embodied in the Affordable Care Act that the government should be allowed to come between patients and the best medical judgement of their doctors.

Part D is the free market beachhead in Medicare. The program is a successful template for broader healthcare reform and for the efficient delivery of benefits at many levels of government. On behalf of the millions of Americans that our organizations represent we urge you to reject efforts to weaken and undermine Part D.


Senator Jim Buck (IN-21)

American Legislative Exchange Council National Chairman

Chairman, Commerce, Economic Development & Technology Committee

Ranking Member, Utilities Committee


Senate President Wayne L. Niederhauser (UT-9)

Chairman, Legislative Management Committee

Board Member, ALEC


Representative Jason Saine (NC-97)

Vice-Chairman, House Appropriations Committee

Co-Chairman, Joint Legislative Committee on Information Technology \

Board Member, ALEC


Senator Leah Vukmir (WI-5)

Former American Legislative Exchange Council (ALEC) National Chairman

Senate Assistant Majority Leader

Chairman, Committee on Health and Human Services

Vice-Chairman, Committee on Judiciary and Public Safety


Senator Joel Anderson (CA-38)

Vice-Chairman, Elections and Constitutional Amendments

Vice-Chairman, Public Safety

Board Member, ALEC


Representative Alan Clemmons (SC-107)

Chairman, House Rules Committee

Board Member, ALEC


Senator Andre Cushing (ME-10)

Assistant Senate Majority Leader, Maine Senate

Board Member, ALEC


Representative David Frizzell (IN- 93)

Assistant Majority Floor Leader

Chairman, Family, Children and Human Affairs Committee

Board Member, ALEC


Speaker William Howell (VA-28)

Chairman, Rules Committee

Board Member, ALEC


Representative Phil King (TX-61)

Chairman, State and Federal Power and Responsibility Committee

Board Member, ALEC


Representative John Piscopo (CT-76)

Board Member, ALEC


Senator William Seitz (OH-8)

Board Member, ALEC


Senate President Susan Wagle (KS-30)

Chairman, Interstate Cooperation Committee

Chairman, Organization, Calendar and Rules Committee

Vice-Chairman, Legislative Coordinating Council Committee

Vice-Chairman, Commerce Committee

Board Member, ALEC


Speaker Linda Upmeyer (IA-54)

Chairwoman, Legislative Council Committee

Board Member, ALEC


Representative Terri Collins (AL-8)

Chairwoman, Education Policy Committee

ALEC State Chair of Alabama


Representative Regina Cobb (AZ-5)

Vice-Chairman, Health Committee


Representative Don Shooter (AZ-13)

Chairman, Appropriations Committee


Senator Pat Bates (CA-36)

Vice-Chairwoman, Appropriations Committee

Vice-Chairwoman, Business, Professions and Economic Development Committee


Senator Larry Crowder (CO-35)

Vice-Chairman, Health and Human Services Committee


Senator Judson Hill (GA-32) (Until 02/13/2017)

Former Chairman, ALEC Health and Human Services (HHS) Task Force


Senator Lee Heider (ID-24)

Chairman, Health & Welfare Committee


Senator Steve Vick (ID-2)

Vice-Chairman, Resources & Environment Committee

ALEC State Chair of Idaho


Representative Ron Bacon (IN-75)

Vice Chair, Public Health Committee

Member, Medicaid Advisory Committee


Representative Woody Burton (IN-58)

Chairman, Financial Institutions Committee


Representative David Wolkins (IN-18)

Chairman, Environmental Affairs Committee

Vice-Chairman, Select Committee on Government Reduction

ALEC State Chair of Indiana


Representative Dennis Zent (IN-51)

Public Health Committee


Representative Dan Hawkins (KS-100)

Chairman, House Health and Human Services Committee


Representative Paul Hollis (LA-104)

Vice-Chairman, Commerce Committee


Representative Kim Ferguson (MA-1st Worcester)


Senator Gail Bates (MD-9)

ALEC State Chair of Maryland


Delegate Susan Krebs (MD-5)

Member, Health and Government Operations Committee

Member, ALEC Health and Human Services (HHS) Task Force


Assemblywoman Robin Titus, MD (NV-38)

Chairwoman, Assembly Natural Resources, Agriculture and Mining Committee

Vice-Chairwoman, Assembly Health and Human Resources Committee


Representative Jon Bumstead (MI-100)

Vice-Chairman, House Appropriations Committee


Representative Gary Glenn (MI-98)

Vice-Chairman, Energy Policy Committee


Representative Hank Vaupel (MI-47)

Vice-Chairman, Health Policy Committee


Representative Michael Webber (MI-45)

Vice-Chairman, Criminal Justice Committee

Vice-Chairman, Government Operations Committee


Senator Mary Kiffmeyer (MN-30)

ALEC State Chair of Minnesota


Representative Nick Zerwas (MN-30A)

Health and Human Services Finance member


Senator Roger Webb (MT-23)

Vice-Chairman, Joint Health and Human Services Committee

ALEC State Chair of Montana


Representative Donny Lambeth (NC-75)

Chairman, Health Committee


Senator Louis Pate (NC-7)

Deputy President Pro Tempore

Co-Chairman, Appropriations on Health and Human Services (HHS) Committee

Co-Chairman, Health Care Committee


Representative Dennis Riddell (NC-64)

Vice-Chairman, Appropriations Committee

Chairman, Regulatory Reform Committee


Representative Michael Vose (NH-9)

Assistant Majority Leader

Committee on Science, Technology and Energy


Representative Yvette Herrell (NM-51)

Committees on Business & Industry, Government, Indian & Veterans Affairs


Former House Speaker Don L. Tripp (NM-49)


Representative Louis Blessing (OH-29)

Chairman, Government Accountability and Oversight


Representative Andrew Brenner (OH-67)

House Education Committee



Senator Bill Coley (OH-4)

Vice-Chairman, Finance Committee

Chairman, Government Oversight and Reform Committee

ALEC State Chair of Ohio


Senator John Eklund (OH-18)

Chairman, Criminal Justice Committee


Representative Brian Hill (OH-97)

Chairman, Agriculture and Rural Development Committee


Senator Matt Huffman (OH-12)

Senate Committee on Rules & Reference


Representative Lou Terhar (OH-30)

Member Armed Services, Veteran Affairs, and Public Safety Committee

ALEC State Chair of Ohio


Representative Andrew Thompson (OH-95)

Chairman, Finance Subcommittee on Agriculture, Development, and Natural Resources


Senator Joseph Uecker (OH-14)

Chairman Local Government, Public Safety and Veterans Affairs Vice Chair Government Oversight and Reform Committee


Representative Ron Young (OH-61)

Chairman, Economic Development Commerce and Labor Committee


Senator Kim David (OK-18)

Chairwoman, Appropriations

ALEC State Chair of Oklahoma


Representative Harold Wright (OK-57)

ALEC State Chair of Oklahoma


Senator Seth Grove (PA-196)

Chairman, Education Subcommittee on Technical Education and Career Readiness

ALEC State Chair of Pennsylvania


Representative Jim Stalzer (SD-11)

ALEC State Chair of South Dakota


Senator Bill Ketron (TN-13)

Senate Ethics Committee

Joint Fiscal Review Committee

ALEC State Chair of Tennessee


Delegate R. Steven Landes (VA-25)

Vice-Chairman, House Appropriations Committee

Chairman, House Education Committee


Senator Peg Flory (VT- Rutland District)

Chairman, Senate Committee on Institutions


Representative Brad Klippert (WA-8)

Ranking Minority Member, Public Safety Committee


Representative Matt Manweller (WA-13)

Ranking Minority Member, House Labor & Workplace Standards Committee


Senator Mike Padden (WA-4)

Chairman, Law and Justice Committee

Vice-Chairman – Accountability and Reform Committee


Representative Liz Pike (WA-18)

Committees on Local Government, Labor and Workforce Standards, Transportation


Representative Jay Rodne (WA-5)

Committees on Judiciary, Health Care & Wellness, Transportation


Representative Joe Schmick (WA-9)

Ranking Member, Health Care & Wellness Committee


Representative Shelly Short (WA-7)

Local Government Chair


Senator Alberta Darling (WI-8)

Co-Chairwoman, Committee on Finance

Vice-Chairwoman, Committee on Education


Representative John Nygren (WI-89)

Chairman, Committee on Finance

Co-Chairman, Joint Committee on Finance

Chairman, ALEC Health and Human Services (HHS) Task Force


Senator Tom Takubo, D.O. (WV-17)

Chairman, Economic Development Committee

Vice-Chairman, Health and Human Resources Committee

Ranking Member, Judiciary Committee


Mr. Rea S. Hederman, Jr.

Executive Vice President, The Buckeye Institute


Don Racheter, Ph.D.

President, Public Interest Institute


Ms. Beverly Gossage, HSA/HRA Specialist

President, HSA Benefits Consulting


Mr. Charlie Katebi

Health Policy Analyst, Wyoming Liberty Group


Mr. Dan Weber

Founder and CEO, Association of Mature American Citizens (AMAC)


The MacIver Institute

[Download the letter here]