The Politics of a Medicare Rx Program
George Bush promised to provide Medicare recipients with a prescription drug plan. Two years later there is still no plan and it remains to be seen if Congress will pass a meaningful Medicare prescription drug benefit before the November elections. If the past is any guide, rhetoric will substitute for action. The complexity of the issue provides cover for those who give lip service to a comprehensive Medicare prescription drug benefit, while simultaneously undermining its passage.
There are two themes that run throughout the debate: program cost and program administration.
COST
A Medicare prescription drug benefit will be expensive, and
current economic uncertainty only adds to concern over the
budgetary impact of a Medicare Rx program. While budgetary
concerns are valid, the issue can’t be analyzed in
a vacuum. It has to be assessed against other budgetary demands.
A recent study by the Center on Budget and Policy Priorities compared the budget impact of two possible Medicare prescription drug plans with that of the Bush tax cut if it were made permanent – including the tax cut for the richest one percent of the population. The first plan would generally cover one-quarter of prescription drug costs for the Medicare population. The more generous second plan would generally cover one-half of those costs.
As demonstrated on the following page, the total cost of each plan is less than last year’s tax cut and the difference in costs between the two plans is less than the cost of the tax cut for the wealthiest one percent of the population. In this context, the passage of an adequate Medicare prescription drug bill is less a question of cost than a question of the political will of Congress.
PROGRAM ADMINISTRATION
Republicans insist on administering any Medicare prescription
drug program through private insurance companies, under the
rationale that competition will restrain costs and save taxpayers
money. Ironically, it was the failure of private insurers
to adequately cover seniors that led to the passage of Medicare
in the first place. Recent history provides further damaging
evidence. Competition among private insurers was supposed
to hold down costs in the Medicare Plus Choice (M+C) program.
In fact, the program was more expensive than traditional
Medicare, and insurers ended up dumping millions of Medicare
beneficiaries. Finally, the performance of private insurers
in the Medigap (supplemental Medicare insurance) market belies
Republican claims of efficiency. In fact, rising Medigap
costs are pricing more and more seniors out of this market,
especially in those plans that offer prescription drug coverage.
The charts below highlights some of the key features of the three leading plans now pending in Congress. The UAW supports the Senate Democratic Bill. All of the plans are voluntary. For the sake of comparison, all plans are measured from a starting date of 2005 to 2012.
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