It looks as though Congress may fulfill its promise of a Medicare drug benefit this year, but more tax cuts will make paying for it a challenge.
Published June 15, 2003
A prescription drug benefit for Medicare recipients, long promised by Congress, could finally happen this year. The political stars have aligned because neither party wants to be accused of breaking its promise and both are willing to ignore the fact that they can't afford the needed, but costly, benefit.
The Senate Finance Committee passed a bill with broad bipartisan support, and the House doesn't seem too far out of step with its proposal. Chances for success improved when congressional Republicans rejected President Bush's demand that retirees be forced to enter risky managed-care programs to get the drug benefit. That approach has been unpopular with Medicare recipients, 90 percent of whom have chosen traditional fee-for-service coverage over the HMOs currently available.
Both proposals would allow health care providers to compete with the government, but would offer the drug benefit to all recipients no matter their choice. There is nothing wrong with experimenting with private plans that offer preferred networks of doctors, as long as retirees are not forced into them. But judging from past experience and the lack of enthusiasm by health insurers, there is little reason to believe such plans are viable alternatives to Medicare.
Under the Senate proposal, Medicare recipients who chose the drug benefit would pay a $35 monthly premium and $275 yearly deductible. Then the government would pick up half of all prescription costs to $4,500. Recipients would be responsible for 100 percent of their costs between that limit and $5,800, after which the government would pay 90 percent of costs.
The House offers a similar package, although the coverage gap in the House proposal is larger. Also, the House would make retirees with incomes over $60,000 spend more of their own money before being eligible for catastrophic coverage. Such "means testing" might sound reasonable, but it could threaten support for the legislation. Medicare has endured at least partly because of its egalitarian approach to health care.
The Senate proposal is not a perfect plan, but it is better than the House version and has the best chance to become law. It offers something to retirees who use few drugs and to those with catastrophic costs. As prescription drugs have played an ever more vital role in medical treatment, millions of Medicare recipients have been priced out of adequate care. A drug benefit is the right thing to do.
That leaves the most difficult question: How is Congress going to pay for it? The answer is not clear. Both proposals would come in under $400-billion (over 10 years) according to congressional estimates, a limit Congress has imposed on itself, but that hefty number is also the amount projected for this year's federal deficit.
One thing is certain. Lawmakers cannot hope to sustain a credible prescription drug benefit for retirees and enact irresponsible tax cuts that weaken the government's ability to meet its obligations.
