THE MEDICARE DRUG BILL: An Impending Disaster For All Americans

Founded in 1973, The Heritage Foundation is a research and educational institute - a think tank - whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

With the support of the Bush Administration, or at least with the White House’s passive acquiesce, Congress appears on course to enacting a huge new entitlement aimed at middle-income Americans. President Bush likely will sign whatever bill emerges. And as President Clinton’s Medicare administrator puts it “In signing it, as he will surely be forced to do, he will preside over the biggest expansion of government health benefits since the Great Society.”

The legislation makes a mockery of sensible budget control or prudent reform. Rather than combining steps to help some seniors with reforms to the unsustainable finances of the Medicare program, Congress’ “reforms” will reduce choice and innovation and impose staggering financial burdens on our children and grandchildren.

No Fixed Budget = Massive Tax Burdens
Congressional proponents of the legislation maintain that the new drug benefit will cost $400 billion over the next 10 years. This of course is merely a guess. Since the program is an entitlement there is no fixed budget. Moreover, the evidence from both the private and public sectors in recent years suggests that future costs are likely to exceed projections. But even if they are accurate it is not the next 10 years that matter. It is the years after that when the full force of the Baby Boom generation hits Medicare and Social Security. Within 15 years Medicare already faces a Niagara Falls of red ink. Adding a drug benefit without serious reforms and constraints on future spending means massive tax burdens on generation to come.

The bill is needed, say leaders of both parties, to help seniors who face heavy prescription drug costs. To be sure, many lower-income elderly do need help. But today about three-quarters of all seniors already have private insurance against onerous costs, and the pricing of that insurance does force seniors to strike a prudent balance between desire and cost.

Unconscionable Approach
It makes sense for our society to provide assistance targeted toward those who still face heavy burdens, chiefly because of their income. But Congress’ approach would institute a government-sponsored drug program for all Medicare recipients, not just those who need help. For several reasons that approach is unconscionable.

First, there will be powerful incentives for current and future middle-income seniors to forego private insurance protection at realistic prices in favor of government-sponsored drug coverage at subsidized prices. Moreover, corporations and other entities facing high retiree health benefits will soon find creative ways to shift retire drug costs to the taxpayer. The result: taxpayer costs will rise further.

Second, proponents are naïve when they claim that seniors will have many choices of coverage under the legislation – private plans as well as traditional Medicare benefits. Hard lessons from the past, combined with likely design requirements in the final bill, suggest that few private plans will join the program. Mass withdrawals of plans from the existing Medicare+Choice program show what happens when Congress imposes regulations and controls in an effort to cut costs. And in an effort to curb a surge in spending, the government will no doubt gradually tighten regulations on any private plans that do join the drug program, leading to fewer and fewer private plans. It remains to be seen how seniors will respond to this. But when Congress last tried to provide a drug benefit that jeopardized coverage many seniors already had – in 1988 – the backlash was so severe that Congress repealed the legislation within a few months.

Third, despite claims that the new program is modeled after Congress’ own health program, which includes drug coverage, nothing could be further from the truth. The Federal Employees Health Benefits Program (FEHBP) is open to virtually any private plan or insurer meeting some basic benefit requirements and consumer protections. Premiums for these plans vary and reflect the benefits included in the plans, and federal workers choose from among many competing plans.

No Serious Reforms, Fuels Taxpayer Costs
By contrast, Congress will determine the benefits in the legislation moving through Congress, and the government will decide how many of the lowest bidding preferred provider plans will be permitted to offer coverage to seniors in any area. Moreover, because Congress would take a prominent role in influencing prices and benefits – unlike in the FEHBP – the political dynamics would work in the same way as they do today in Medicare. Politicians would be under relentless pressure to keep prices down for their constituents, while drug companies, doctors and seniors would press for ever-more generous coverage. The result: larger and larger subsidies and costs to future generations. Thus not only does the legislation contain no serious reforms to control costs without undermining quality, it actually fuels taxpayer costs.

President Bush and congressional leaders had an opportunity to combine help for some Americans in genuine need with sensible reforms so that our children and grandchildren might look forward to an affordable and high-quality Medicare program. With the looming political and financial juggernaut of the Baby Boom generation approaching retirement, this legislation probably is the last opportunity for hard decisions. But rather that taking a firm leadership role in the legislative process, President Bush elected instead to send Congress a framework and then invited lawmakers to fill in the details. The result was predictable. The process is fast becoming a political feeding frenzy, in which short-term partisan advantage trumps responsible action. While today’s politicians may reap the benefits, it is future generations who will have to pay for this unforgivable failure of leadership.
[END OF TRANSCRIPT]

"Republicans and Democrats have distracted us with unending battles between haves and have-nots for decades. Over the same period, they have bankrupted the country,"
Source

Senate Panel Adds Drug Benefits in Medicare Overhaul - June 13, 2003
"An influential Senate committee tonight approved the biggest expansion of Medicare in its 38-year history, with an overwhelming bipartisan vote to add prescription drug benefits....The bill would increase federal spending by $400 billion.."

Is the Tax Cut for Real?
"The Bush administration inherited a federal budget of $1.86 trillion, and now proposes to spend $2.3 trillion in 2004, for a whopping 23.6 percent increase in federal spending in this short period. The Bush presidency has far outspent Clinton's in every category. As Cato's Chris Edwards says, "[B]ased on his first three budgets, President Bush is the biggest spending president in decades." To close the gap between spending and revenue, said a report commissioned by the US Treasury, would require an "immediate and permanent 66 percent across-the-board income tax increase."

"George W. Bush is the 43rd President of the United States. Formerly the 46th Governor of the State of Texas, President Bush has earned a reputation as a compassionate conservative who shapes policy based on the principles of limited government,..."

Honey, don't you think
it's great how President Bush
and Congress have spending and fiscal
responsibility under control. Yes, did you see
Laura kiss the President today?

Quietly, Bush Signs Bill Raising Debt Ceiling

The Boston Globe
By Associated Press
May 28, 2003

ASHINGTON -- Without comment or ceremony, President Bush yesterday signed a bill allowing a record $984 billion increase in the amount the federal government can borrow, to a record $7.4 trillion.

The increased federal borrowing will enable the government to pay for the $350 billion economic stimulus package that the GOP-led Congress passed last week at Bush's behest.

Bush will hold a signing ceremony at the White House today to celebrate passage of that legislation, White House spokesman Ari Fleischer said. The package includes $330 billion in tax cuts and $20 billion in aid for states.

Passage of the bill raising the nation's debt ceiling came Friday, hours after the tax-cut bill was approved. Congressional Democrats had sought to spotlight the burgeoning debt.

But Republican leaders maneuvered to pass the debt-ceiling measure quickly and with little fanfare.

The House had avoided a direct vote on the debt limit by reviving a rule that made its approval of a borrowing increase automatic when Congress finished its annual budget last month.

After running annual surpluses during the last four years of the Clinton administration, the US government has returned to deficit spending. This year's deficit is expected to exceed $300 billion, a record, and huge future shortfalls are expected.

Bush's signing of the bill -- announced in a statement with a single sentence -- will enable the government to borrow money until sometime next year.

The current $6.4 trillion limit was breached earlier this year.

Failure to extend the borrowing limit could have led to a first-ever federal default -- something neither party wants to explain.

This story ran on page A6 of the Boston Globe on 5/28/2003.

Who's 'Getting The Shaft' On Medicare?

Townhall.com
By Brent Bozell
July 30, 2002
Source

For several years now, politicians of both parties have been falling all over themselves to support yet another government entitlement: paying a hefty slice of prescription drug costs for senior citizens in the Medicare program.

Creeping socialized health care is a reality because no one is doing a thing to stop it.

It does not matter that the average senior citizen pays only $650 a year on his or her prescriptions. It does not matter that the current Medicare program's share of our economy is already expected to double between now and 2035. It does not matter that senior citizens are usually much wealthier than the young kids just getting married, starting families, and expected to pay for this. What matters is that elections are coming. Everyone knows that senior citizens vote in noticeably larger percentages, and that's all that counts for our career politicians.

If you pinched a politician, he'd acknowledge that most lawmakers don't expect a prescription-drug subsidy to pass this year. Conservatives with an eye on bulging deficits -- and how Democrats will blame them on the "huge" Bush tax cut, no matter how much wasteful new spending is added -- are praying for gridlock to keep the budget in check.

But in the socialist hotbeds of network news, stalemate is an outrage. Washington is worthless unless politicians are loading yet another budget-busting, ever-expanding retirement subsidy on the backs of unretired taxpayers. On CBS, Dan Rather was lobbying for just one subset of his fellow citizens. "Senior Americans who saw retirement savings evaporate in the Wall Street meltdown have another financial headache now," he warned. "It turns out it was all talk and no action with the President and Congress again today on passing any version of Medicare prescription drug coverage."

Reporter Bob Schieffer explicitly endorsed the new subsidy. He quoted liberal Sen. Tom Harkin that "It's time that we make good on the promise of 44 million Americans who rely on Medicare." But then this objective reporter added: "It's a good thought. Drugs have become so expensive, seniors can go to places like Mexico and buy American-made drugs cheaper than they can buy them at home." Not done, Schieffer sounded the alarm: "They say they'll keep trying, but don't bet on them getting far. Instead, expect Democrats to blame Republicans, Republicans to blame Democrats, and the White House to blame Congress. Seniors, in the meanwhile, just get the shaft."

So, let's get this straight. The average annual amount of Medicare benefits per enrollee right now, before any new goodies, is $6,200. That's taken right out of the hides of younger people in the work force. But because Congress hasn't yet larded another thousand or two on that average bill, seniors are the group "getting the shaft"?

Over at ABC, Charles Gibson seemed upset that the Senate couldn't agree on a plan. He pleaded to reporter Jackie Judd: "I mentioned 34 million Americans eligible for it. That's a lot of voters. Elderly people say they want it. Can they come up with a compromise before this coming election?"

It's bad enough that we're faced with liberal unanimity with both parties pandering to pile on the senior subsidy bandwagon. But when reporters can't find one second of air time for anyone opposed to another hemorrhaging entitlement, it's an outrage. They could have called Tom Miller, the director of health policy studies at the Cato Institute. He thinks feeding this sort of political appetite will only worsen Medicare's fiscal stress down the road, when Medicare will take more and more from the general revenue pot and less from payroll taxes and monthly premiums.

Miller argues: "Simply adding another layer of underfunded, irresponsible promises to Medicare will stimulate beneficiary demand for 'cheap' drugs and overuse of those benefits. It is sure to be followed by exploding budgetary costs and increases in the 'unsubsidized' price of Medicare's prescription drugs. Up next will be waves of drug coverage rollbacks, regulatory restrictions, tighter drug formularies and price controls that chill future innovative research and snuff out the next round of life-saving drugs."

A serious concern worth explaining? Nah. The Bob Schieffers of this world aren't really students of policy debates. They're hackneyed pleaders for more government. Who among the TV-news junkies doubts that if Miller's scenario came true -- exploding taxpayer costs, price controls, regulatory restrictions -- the Schieffers would be out there shaking a fist at "draconian benefit cuts" and demanding more government cops to pound on those greedy drug manufacturers?

It's propagandistic news coverage like this -- reporters and anchors do everything but wave placards -- that drives viewers in droves away from network news, searching for that elusive other side of the story. One of the groups that's spent decades "getting the shaft" is broadcast-news viewers who'd like even a few seconds of balance for the idea that another government program is not the answer, or opposing the idea that government's highest calling is to redirect tax dollars to the most frequent voters, regardless of actual need. But that's asking too much.

HillaryCare Medical Rules To Become Law

Newsmax.com Magazine
By Wes Vernon
June 15, 2002

HillaryCare is coming through the back door. By the time you know it's there, it will be too late to stop it. Your confidential medical records will be public knowledge. In the next few years, it is going to become increasingly simple to transfer electronic medical records over the Internet.

The back door to this invasion of your privacy is being held wide open in the Bush administration by many of the same bureaucrats who promoted socialized medicine under Bill Clinton. But key Bush administration people are letting it happen.
[End of partial transcript]

Your Confidential Medical Records Are an Open Book

Bush Administration Scraps Written Consent Forms That Would Have Been Required in Patient Privacy

"I believe privacy is a fundamental right, and that every American should have absolute control over his or her personal information."
George W. Bush - Associated Press - Oct 6, 2000.

GOP Forms Prescription Drug Plan [AARP alligns with GOP]
"According to the Congressional Budget Office, seniors this year are expected to spend $87 billion on prescription drugs. But by 2012, the CBO estimates drug costs for seniors will more than triple, rising to $278 billion. So, when Republicans talk of a 10-year plan with $300 billion in drug benefits, current cost estimates for the 10 years from 2002-2012 are more than $1.8 trillion."

AARP! That torch carrying entity of constitutional principles.

"Seniors often pay the highest prices for drugs out of their own pockets"
George W. Bush - Source

Can you imagine this? Americans paying for drugs out of their own pockets? The horror of it all.

The socialists are in agreement now.

STATEMENT OF SENATOR EDWARD M. KENNEDY ON THE NEED FOR A MEDICARE PRESCRIPTION DRUG BENEFIT February 27, 2002 For Immediate Release Contact: Jim Manley/Stephanie Cutter (202) 224-2633 Medicare is a solemn promise to senior citizens. It says, "Work hard. Pay into the system, and we will guarantee you health security in your retirement years." But that promise is broken every day, because Medicare does not cover the cost of needed prescription drugs. When it comes to prescription drugs, the elderly face a double whammy. Costs are going up, and coverage is going down. Even before the recession, private retiree health coverage was collapsing. Now a wave of corporate bankruptcies is leaving more and more retirees out in the cold. Only a Medicare prescription drug benefit can provide the safe, solid, affordable coverage senior citizens need. Mending the broken promise of Medicare should be a bipartisan priority. But under the President's program, tax cuts for the wealthy come first and prescription drugs for the elderly come last. The Administration's budget calls $600 billion for more tax breaks for the wealthy, but less than one-third that amount for prescription drugs. That's the wrong priority. It's less than the Republican Congress authorized just last year -- and it is much, much less than senior citizens need. The Bush Plan would cover less than 13 percent the elderly's prescription drug costs. Trying to meet the needs of senior citizens under the Administration's budget is like trying to fit an elephant into a breadbox. If the Bush program were enacted tomorrow, senior citizens would still be forced to choose between food on the table and the medicines their doctors prescribe. Senior citizens deserve Medicare coverage of prescription drugs. It is a priority for the American people. It is a priority for Democrats. And it should be a priority for the Congress as well. Democrats will fight until the broken promise of Medicare is mended, and every senior citizen can afford the prescription drugs they need. We urge the President and the Republicans in Congress to join us in this fight.

-30-

"And then, of course, there's Senator Edward Kennedy. And the folks at the Crawford Coffee Shop would be somewhat shocked when I told them I actually like the fellow. He is a fabulous United States senator."
Source

Only One Side On Medicare

Media Research Center
By L. Brent Bozell III
July 1, 1999

As the hourglass of the Clinton presidency empties toward an end, the networks are trying to wrap up this party the way they began: promoting more socialized medicine. The big network anchors and reporters have unilaterally decided that this very long scandal phase of the Clinton years is over, and now we must march on to the exciting thought of growing the government, to speak in their vernacular.

Bill Clinton has announced triumphantly that the feds somehow have found an additional trillion dollars in federal surpluses coming out our ears, so it is our patriotic duty to spend this taxpayer bounty on Medicare beneficiaries. Clinton proposes we start by subsidizing prescriptions. Okay, how much of this surplus would be spent? CBS reporters surprisingly warned several times it would be "expensive." But they were the exception. For most of the press, the mantra was cost, schmost, we just gotta have it.

On NBC's "Today," co-host Katie Couric was unequivocal in her endorsement: "It sounds like a no-brainer. Seniors spend billions of dollars on prescription drugs every year, often putting them in terrible financial situations. So what's wrong with this plan?"

Later on the same show, NBC reporter Lisa Myers warned of the savage drug market: "Seniors without the bargaining muscle also must deal with rising overall drug prices, up 68 percent in the last eight years. Now the average prescription costs $37, the average brand name drug almost $52. Pharmacist Jack Collins says he sees a serious, perhaps deadly toll on elderly customers."

Call it Medi-scare Redux: if you don't do what liberals want, people will die!

Myers suggested a solution to this epidemic of drug-deficient retirees: "The President's plan, however, will try to change that and require that seniors be given a discount of about ten percent on all drug purchases. O'Laughlin [a Medicare beneficiary who led the story] says every little bit helps and hopes Medicare will finally begin to meet her changing needs, so that she can both stay well and afford to live well." So now we have a new entitlement: the right not to be burdened by large prescription bills.

But that evening on ABC's "World News Tonight," reporter John Cochran suggested Bill Clinton's plan was actually too little. "For many older people the Clinton plan is welcomed, but it would hardly solve the problems of those who have huge drug bills every month. That would include the Mitchells, who live in Florida," he declared, introducing his sympathetic characters. "Sixty-eight-year-old Willie has kidney problems, heart problems, and diabetes. The Mitchells' combined income each month from Social Security is only $1,200. Last month Willie's drug bill alone was more than $1,000. To make it through each month he cuts back on food and on medications, cutting his pills into quarters."

Cochran continued to hammer home the flaws in Clinton's underfinanced plan: "Under the Clinton plan Willie would only get $83 a month, not enough and he is skeptical Washington politicians will do even that much." Cochran concluded with his selected victim's best pitch: "His doctor urged him to go to Mexico, where drugs are cheaper. But as a war veteran who paid taxes all his life, Willie can't understand why his own government can't help more."

With that kind of emotional heart-tugging, how could you oppose the proposed new spending?

But Couric, Cochran, Myers, and Co. aren't bothering to look at some facts. James Frogue of the Heritage Foundation found a very different picture. According to the Bureau of Labor Statistics, the average senior spent $637 out of pocket on prescription and non-prescription drugs in 1997. This contrasts with the $1,193 that same senior spent on "dining out." The National Academy of Social Insurance, in a recent study, found that the median amount spent by seniors out of pocket on drugs is $200, meaning that 50 percent of America's seniors spend less than $200 annually on drugs. That also means victims like Willie Mitchell, with his monthly $1000 drug bill, is utterly atypical of seniors, and focusing on him is competely typical for panicked network reporters.

Frogue also notes that Clinton would increase the burden on the administrators of Medicare, the Health Care Financing Administration. The need for some cost control would then lead to limiting the number of drugs available to recipients. While HCFA is already struggling with 800 million annual claims from Medicare Part A and B, "the additional administrative load involved in overseeing Medicare Part D (prescription drugs), with potentially over a billion claims, would be an administrative nightmare."

But the networks don't really care about the gory administrative details, as long as they've riveted their audiences with scary stories that sell the false security of statism, and the resulting electoral success of their liberal Democrat friends.

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STATEMENT OF SENATOR EDWARD M. KENNEDY ON THE NEED FOR AMEDICARE PRESCRIPTION DRUG BENEFIT

STATEMENT OF SENATOR EDWARD M. KENNEDY ON THE NEED FOR A
MEDICARE PRESCRIPTION DRUG BENEFIT