Medicare Drug Bill Not in Near Future

Jan. 30, 2002 -- Remember during the presidential race of 2000 when both parties promised some kind of drug benefit? Well, today seniors still don't have it,because a lot has happened since that campaign. And that was obvious from the president's State of the Union Address Tuesday night.

In a speech that was confidently presented, but thoroughly bellicose in language, the president subordinated domestic social policy concerns to terrorism, homeland security, and what he vaguely called economic security.

The president said we would spare no "costs" in forging our "war" on insecurity from attack. But, when speaking briefly about the importance of "modernizing" Medicare with a prescription drug benefit, he made no such promise of action and no such commitment to do whatever it took to free the elderly of financial insecurity from drug expenses.

What Is Holding Up the Prescription Drug Bill?

Here are some of the reasons why you or your grandparents do not now or will not soon have a prescription drug benefit.

The first and most important reason is simple.

What President Bush would agree to as a reform would not satisfy the Democrats in the Congress and what the Democrats favor, Bush would veto. So, part of what is going on is stalemate over reform when the Congress is so evenly divided.

The same was true from 1961 to 1965, when Medicare was enacted. Put another way, when a big problem is addressed, neither side wants to let the other get the creditwhen they disagree about what's right to do.

And so what was presented Tuesday night was a policy gesture, not a proposal likely to be enacted.

A second reason is that covering drugs scares the devil out of thebudget folks. Prescription drug payments have been rising at nearly 20percent per year. Catastrophic protections — that is, deductibles of $4,000 or$6,000 a year — are not what the population expects.

But anything more generous is frightening for those in charge of public budgets. Sept. 11, the recession, and the tax cuts — all of these have driventhe great surpluses away. And it was the forecasted surpluses that allowedGore and Bush to trade "plans" as if the money was available.

Voluntary Insurance Plans

A third reason is seemingly simple, but politically important. Harping on a problem is less risky than dealing with the real difficulty of producing a workable drug plan that will pass the Congress.

One major difficulty is technical, but needs discussion. The Bush administration has favored a voluntary plan for drug insurance.

But, voluntary insurance plans are subject to unraveling in this way. Subsidizing a premium attracts attention.

Those seniors expecting or experiencing high drug costs sign up for the program. This process of self-selection drives up the per-person costs of coverage.

As drug premiums rise, the number of Medicare beneficiaries able and willing to pay the increased cost declines, subsidies, inflating premiums, declining coverage, and what do you get? "Adverse selection" is what the insurance gurus call it — the death spiral of a flawed insurance scheme.

Finally, there is the sheer variety of reforms struggling to getattention. For some the answer is letting Medicare patients purchase drugs at the average price paid by, say, Canadian health insurers. But this is "price controls" in the Bush vocabulary.

Or,maybe the place to begin is with a list of four or five major chronicillnesses for which prescription drugs are crucial: the prevention of heartattacks with cholesterol-lowering drugs; the control of diabetes; the drugsthat contain Parkinson's disease, and so on. But, someone will object tothat formulation.

In short, it will take a bigger shift in the Congressbefore the question changes from when will we get to prescription drugs towhich of these options can we really get a majority of the members toaccept. That day is not now, as the president's rushing by Medicare reform last night suggested.

Theodore R. Marmor is the author of The Politics of Medicine and a professor of both public policy & management and political science at Yale University School of Management