Deja vu disaster in Medicare drug benefit awaits
Senior citizens who eagerly await a Medicare prescription drug benefit might want to be careful what they wish for, if history is any guide.
The political positioning over a Medicare drug entitlement has reminded longtime Capitol Hill watchers of a similar scenario from June 1988 when Washington enacted the Medicare Catastrophic Coverage Act that turned eager supporters into angry opponents within weeks of discovering the law’s horrendous details.
Lawmakers are poised to make the same mistake again, vowing to return to Washington in September after their August recess to work out a compromise bill to add a massive new entitlement to Medicare.
If they listen closely, they could hear the ghosts of political disasters past, echoing warnings throughout the Capitol’s back rooms. In 1988, a presidential election year, Congress, wanting to pander to seniors, passed the legislation to provide coverage for catastrophic illness and drug costs and the public responded with an 80 percent favorable rating in public opinion polls … until the facts surfaced.
According to The Heritage Foundation, a Washington-based public policy group, seniors soon discovered the costs were astronomical with a sliding-scale tax of up to $1,600 per couple annually — half that for singles — and a flat drug premium with a 50 percent co-pay and high deductible. Seniors were forced into paying for the programs, even if they had better private insurance and didn’t need them.
The following year, when the seniors mob turned on Congress in revolt, the law was repealed. Based on the current drug benefit exercise, Congress may be headed for a similar outcome.
First, consider the costs. Estimates for the 1988 law weren’t even close to the actual budget requirements and the same thing is occurring now. The $400 billion price tag of the current bill is a low-ball figure that doesn’t take into consideration future growth and reams of Congressional add-ons. The deductible program, which is already confusing, the premiums and the rising out-of-pocket costs will cause seniors to reach for the aspirin.
Secondly, millions of seniors with better drug coverage through private insurance will be dropped and thrown into a Medicare program they may not want. An analysis from the Congressional Budget Office shows that about a third of seniors who receive private coverage would lose those benefits because Medicare could cover their prescriptions. Instead of addressing a benefit to those recipients who don’t have drug coverage — estimated to be about one-fourth of seniors – Congress wants to create a "one size fits all" program that will force millions of beneficiaries into inferior government coverage.
And third, the bill will be a nightmare for the bureaucracy to implement with Medicare’s red tape and price controls.
"Unfortunately, politicians have a short-term view of the future. They seem poised to walk into virtually the same political minefield they blundered into in 1988 — and with just as much misplaced enthusiasm," said Robert E. Moffitt, director of the Center for Health Policy Studies at The Heritage Foundation.
Like in 1988, the consequences will be far worse than the cure.