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Post: Brett Arends’s ROI: Scary ads claiming Medicare is being stripped by $300 billion are playing you

If you’re among the hundreds of thousands—possibly more—who have seen one of these commercials about Medicare and the latest bill in Congress, I’ve got some bad news, some good news, and a puzzle for you.

The bad news is that you’re being played.

The good news is that nobody is “stripping $300 billion from Medicare” by any calculation that would make sense to you or anyone you know. (More on this below.)

The puzzle is in two parts: Who, exactly, is the “American Prosperity Alliance,” the mysterious front organization behind the commercial? And why, exactly, do they want us to pay an extra $300 billion to America’s drug companies?

I can’t say for certain, but I’m hazarding a guess the answer to the second question—who wants us to pay an extra $300 billion to America’s drug companies—might contain a clue to the first question: Who is this mysterious front organization, whose website is registered in Arizona, of all places, whose ownership is “redacted for privacy,” and which was updated just two months ago. (I was not able to reach them to comment on this article.)

Hmmm…How about that?

Let me start with the $300 billion claim in the commercial. Yes, yes, I know, media “fact checkers” have become so openly partisan and biased that it is hard to take them seriously. But in this case they are actually accurate: And I write as someone who (a) rolls his eyes at media partisanship, (b) is a registered independent, and (c) thinks using Medicare to cut drug prices has some downsides.

What does this bill actually do?

Well, imagine going to the supermarket and being given a voucher worth $50 off your next shopping trip. Would you then complain that your grocery budget had been cut by $50?

This is what the bill does—and what the American Prosperity Alliance is complaining about.

The bill will cut drug costs, for Medicare and for seniors directly, by an estimated $288 billion over 20 years. But the losers are the drug companies, not you and not Medicare. It’s the drug companies who will be able to charge Medicare and America’s seniors an estimated $288 billion less for the same drugs.

The Senior Citizens League, an independent lobbying group on behalf of seniors, has this to say: “This legislation cuts almost $300 billion worth of high drug prices in 10 years. That represents savings for taxpayers and more importantly savings for Medicare beneficiaries on their share of prescription drug costs. The Senior Citizens League strongly supports this legislation.”

Tackling high drug prices is not a measure without its downsides. If we live in a world where investors can make unlimited profits by investing in (say) smartphone apps, but only limited profits by investing in drug discovery, then that must logically attract more investment dollars to smartphone apps and fewer dollars to drug discovery. This is economics 101.

Right now America pays high drug prices effectively to subsidize drugs for the rest of the world. We pay top dollar, everyone else gets these great new drugs on the cheap. Yes, Big Pharma is a totally unsympathetic group, and I am sure any glance through the proxy statements will show the usual shameless plundering by the pirates of the C-Suites. Nonetheless, instead of railing at Big Pharma and marveling at the low drug prices paid by the rest of the world, we could usefully do a bit more railing at the rest of the world for freeloading off us.

That said, I see no reason why Medicare and America’s seniors should have to keep carrying the entire burden.

The longer I’ve been writing about this stuff the more I roll my eyes at the buzzword bingo of front group names. “American Prosperity Alliance”? Really? Why not, say, “Patriotic Families for Motherhood, Apple Pie, Truth, Justice and the American Way”? Was that domain name already taken?

If you’re going to be—oh, I don’t know, let’s just pretend, for the sake of argument—a front organization for “Drug Companies For Fatter Profits and Bigger CEO Bonuses,” it would be refreshing if you just called yourself that.

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