House and Senate negotiators reportedly haven’t been able to agree on several issues in a bill that would provide an open-ended prescription drug benefit under Medicare and (maybe) offer hope of reform in the troubled program.
Good. The proposal under consideration, which the White House apparently thinks is the key to buying a lot of senior votes next year and taking the Medicare issue from the Democrats, was poorly thought out to begin with. Some Republicans thought it might be acceptable if they could sneak in a bit of reform. But Senate Democrats saw it coming and say they’ll block it.
That would be the best outcome for all concerned, especially for Americans on the verge of retirement.
The dirty secret of the proposed prescription drug “benefit” is that it would displace existing private-sector drug coverage for millions of seniors. About 78 percent of older Americans now have drug coverage, either through private insurance or plans sponsored by former employers as part of a retirement package.
The Congressional Budget Office estimates that 37 percent of retired employees who now have employer-sponsored health coverage would lose it if this new program were enacted. The new “benefit” would in many cases be more expensive and less comprehensive than what they had before. For those dependent on prescription drugs, that could be more serious than a mere inconvenience.
The other problem, of course, is that a Medicare prescription drug benefit would be a massive new entitlement program of unknown cost. Estimates put the cost at $400 billion over 10 years, or about $40 billion per year, but in fact nobody knows what it would really cost. Every early estimate of Medicare costs has been well below the actual cost.
To begin such a program when the federal government is running deficits again, when spending is increasing by 12.5 percent a year (compared to 2.4 percent a year during the Clinton years), would be the height of irresponsibility.
A few conservatives thought this might be acceptable if they could get the overall Medicare program reformed. They proposed copying the Federal Employees Health Benefits Program, which offers federal employees a choice among a wide range of health plans, with the government paying a fixed amount toward the premium and employees having the option of paying more for more comprehensive coverage. Senate Democrats object, calling that “privatization.” Invoking that word apparently obviates the need for actual argument.
The House-Senate conference committee proposed a “demonstration project” of this proposal. However, as Robert Moffit, director of the Heritage Foundation’s Center for Health Policy Studies, said (citing numerous examples), demonstration projects in Medicare “more often kill reform than facilitate it.”
Congressional Republicans should be content to let this proposal die. They should also let the White House know they’re tired of half-baked proposals offered for short-term political gain.