Conservative Group Laments 'Costly Medicare Entitlement'

(Talon News) -- The conservative Heritage Foundation released a memo on Thursday which highlights the "stunning" $720 billion cost of the Medicare prescription drug benefit over the period from 2006 through 2015. A consistent critic of the president's prescription drug plan, the Heritage Foundation, through the memo's author Robert Moffit, Ph.D., calls the drug entitlement "a costly mistake that needs to be repealed or drastically revamped."

Moffit begins his analysis by first defending the Bush administration and blasting Members of Congress for expressing "shock" at the so-called "rise" in the estimate of the costs of the prescription drug benefit.

"On the face of it, this estimate seems higher than the earlier administration projection of $534 billion," Moffit writes. "But that was for the 10-year period from 2004 through 2013. The current estimate is for the 10-year period from 2006 through 2015."

Moffit added that for legislators to expressive surprise at this "rise" indicates that they are "playing politics or simply do not understand that 10-year projections change with each passing year."

On Wednesday, Sen. Dianne Feinstein (D-CA) issued a statement saying she was "shocked and dismayed" at newspaper reports which place the cost of the Medicare prescription drug benefit at "anywhere from $720 million to $1.2 trillion over ten years."

White House Press Secretary Scott McClellan mentioned in Wednesday's press briefing that the new estimate reflected a higher cost but also noted that the estimate was for a different span of years. McClellan disputed initial claims in some media reports about a potential $1.2 trillion price tag by saying that cost savings were not factored into the calculations.

"It does not take into account the $500 billion in savings that will be realized by the federal government," McClellan explained. "So it's off by, essentially, a half trillion dollars."

Moffit writes that the underlying problem with the prescription drug plan is "not with the honesty of the administration's estimators.

"The problem is that the drug benefit itself imposes staggering new unfunded liabilities on future generations," Moffit explains. "These cannot be honored without huge deficits, huge tax increases, or slashing other programs."

Moffit contends that when Congress passed the prescription drug benefit in December 2003, "senators and representatives were assured that the bill would have an initial 10-year price tag of approximately $400 billion over the years 2004 through 2013." However, Moffit points out that this figure "reached only 10 years into the future and did not include the rapidly rising costs after 2013 attributable to baby boomers receiving full benefits."

"In December 2003, shortly after President Bush signed the bill, Douglas Holtz-Eakin, Director of the Congressional Budget Office (CBO), estimated that the cost of the Medicare drug entitlement could reach $2 trillion during the second decade of the legislation," Moffit writes. "Congress has continued to ignore subsequent warnings by other analysts over the long-term burden on taxpayers from the drug entitlement, including those of former senior CBO officials."

Moffit claims in his memo that Members of Congress were "well aware that most senior citizens, roughly three out of four, had some form of drug coverage from a variety of sources." Moffit adds that legislators also knew that the so-called "access" problem for prescription drug coverage affected "only a minority of seniors who were often poor and could not afford -- or did not have access to -- private, employer-based, or Medicaid coverage."

"But rather than solve that problem and target taxpayer dollars directly to poor seniors without coverage, Congress insisted on creating a costly and unnecessary universal drug entitlement that would largely displace existing spending with new federal spending and disrupt most seniors' existing coverage," Moffit writes.

Moffit says that the best option for "digging out of this costly fiscal hole" is to repeal the prescription drug benefit before it goes into effect in 2006.

"Procrastination will only ensure that the problem will get worse," Moffit concludes.

When contacted by Talon News regarding the political problems facing legislators who might want to vote against the implementation of the plan, Moffit said that the real political problem is going to take place "when the government benefit starts displacing existing coverage."

"Medicaid dual eligibles will have no choice in the matter, and neither will retirees who get the coverage from employers," Moffit told Talon News. "Employers will either drop the retiree drug coverage or scale it back. So the political problems are going to get more difficult if Congress does not act."

Moffit says the best option is "to create a targeted drug benefit, using the prescription drug card that is already in law."

"The cost would be much less than the entitlement," Moffit added. "Juice up the subsidies for the poor, and require a catastrophic component. This would build upon a real market for drugs, and enable people to get the drugs they want and need."

The idea of converting the drug benefit into a means-tested benefit is a better idea than letting the current prescription drug boondoggle go unchecked. Didn't Big Spender say just recently that he'd veto any attempts at reform? I think I heard him say that.
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Well it was a mistake in alot of ways. We get two stories -- white man speak with forked tongue --- one moment we hear "Washington must moderate spending" -- the next moment we have a GIGANTIC medicare expenditure, about which many seniors were very upset, knowing the cost and taxation issues...when is the insanity going to stop???

All of these Big Gov't programs are an invitation to waste and abuse and outright fraud. If this program goes the way that others have gone and is not altered in some way it will be far too costly to be afforded. I am for making changes necessary to insure that it can meet it's objectives in an affordable, controlled fashion.

The federal govt has no constitutional authority to give benefits to citizens, in a sane world I am against them. Since I am tired of being a conservative in a country run by two brands of liberals, gimmee gimmee gimmee. Why do we need to tax citizens at all? Why can't the govt just print as much money as they want for their tasks?

That they do and a big reason is that there are no incentives to moderation and every incentive towards excess, inefficiency and fraud. Third party payment schemes give the patient the impression that 'Someone else is paying' and, as expected, they are less concerned about the costs than they would be if they were responsible in full.

IMO This is the flaw in virtually every Gov't and Private Health Insurance scheme - The feeling on the part of the consumer that the services are free of all cost. When the price is (appears) to be zero the demand is infinite (AKA as Price Elasticity of Demand).

I think I heard him say that.

Your idea makes a lot more sense than the law they passed. This thing should be stopped right now. Drives me crazy seeing pubbies and W spending like 'drunken sailors'. It's HIS JOB to hold the line on spending!
Veto, my foot! That's rich. He'll veto any attempt to fix this mess...didn't think he knew how to veto.

I think I heard him say that.

Well it was a mistake in alot of ways. We get two stories -- white man speak with forked tongue --- one moment we hear "Washington must moderate spending" -- the next moment we have a GIGANTIC medicare expenditure, about which many seniors were very upset, knowing the cost and taxation issues...when is the insanity going to stop???

It will end just as soon as we get a bigger majority in the Senate, haven't you heard!? See you in '06. Blackbird.

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