As the new Medicare prescription-drug entitlement draws closer
to reality, there's one group that will unintentionally benefit
from it at taxpayer expense: private companies.
The Wall Street Journal found a loophole in the new law that allows
companies to get more money from the government. The loophole is
that government subsidy payments will be based on the health-care
spending of both companies and their retirees. "That means
employers can receive substantial government subsidies for their
retiree health plans even if they raise the out-of-pocket costs to
those retirees," the newspaper reported Jan. 28.
That's just one of the problems Congress didn't address in its rush
to create the prescription-drug entitlement in late 2003. But this
unintended consequence wasn't completely unforeseen: The Heritage
Foundation predicted the law's effect on private coverage as early
as June 2003. "…[C]orporations and other entities facing
high retiree health benefits will soon find creative ways to shift
retiree drug costs to the taxpayer," Heritage health-care expert
Stuart Butler wrote.
But Heritage expert Robert Moffit offers solutions to the law,
including delaying its enactment in 2006. Read more of Moffit's
most recent research paper here:
http://www.heritage.org/Research/HealthCare/wm631.cfm.
For more information or to receive an e-mail version of "Bitter
Pills," contact [email protected]
or call Heritage Media Services at (202) 675-1761.
"Bitter Pills" is an occasional, but regular, feature from The
Heritage Foundation on how the 2003 Medicare drug law is full of
sickening "surprises" that have serious consequences for seniors
and taxpayers. Of course, The Heritage Foundation isn't surprised
at all. We diagnosed the problems long ago in ourMedicare Maladies series.
Both Medicare Maladies and Bitter Pills are available on heritage.org (if you can stomach
them).
Report Health Care Reform
Bitter Pills #16: A Law of Unintended Consequences
February 2, 2005 1 min read
The Heritage Foundation
Authors
The Heritage Foundation
More on This Issue
FACTSHEET 4 min read
BACKGROUNDER 35 min read
COMMENTARY 4 min read