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October 27, 2004

Carding Seniors

By

In 1964, President Lyndon Johnson declared a "war on poverty." Thirty years and more than $5 trillion later, the war was failing. It took the 1996 welfare reform to make it work -- though many critics opposed reform, claiming the policies that had been failing for three decades needed more time to work.

The critics aren't so generous when the topic is the new Medicare drug-discount cards. "The Bush administration's drug-discount card program has been a monumental failure," Sen. Ted Kennedy, D-Mass., has declared. When the program was only a day old, Senate Minority Leader Tom Daschle said, "Seniors overwhelmingly now have rejected the drug-discount card."

A devastating indictment -- if it were true.

The card program is doing exactly what it's supposed to do: deliver deeply discounted prescription drugs to enrolled seniors, especially low-income seniors.

Since three-quarters of the 40 million seniors on Medicare already had some sort of drug coverage, the cards were designed for those seniors without coverage. The government estimated that 7.2 million seniors would enroll, and so far more than 4.4 million have done so. Their savings range from 10 percent to 90 percent on their prescriptions, and about a quarter of those seniors are receiving an additional $600 per year to cover the cost of their prescriptions.

But it's an election year, so some politicians will never mention the cards except to condemn them as a failure. Luckily, not all seniors have fallen prey to these scare tactics.

Some 10,000 seniors are calling 1-800 Medicare every day to get answers to their questions about the program, find the best deal for themselves and enroll. If that's failure, what would success look like?

Even seniors who don't enroll are eligible. About 1.1 million low-income seniors who qualify for the $600 annual subsidy have been automatically enrolled in one of 19 cards. All they must do to access their $600 is call and activate the card. Then they'll be able, with the help of trained counselors from the Centers for Medicare and Medicaid Services, to switch cards to one that better suits their needs, if they so choose.

These seniors will then enjoy paying only a 5 percent to 10 percent co-pay for their prescriptions. As a bonus, they'll learn that this election's boogeyman, "big drug companies," are offering a "wrap-around" program that will provide low-income seniors with a 30-day supply of most brand-name drugs for a flat rate, ranging from $12 to $15, once their $600 subsidy is spent. "Through the subsidy and wrap-around coverage, low-income seniors can save substantially more money than buying their drugs from Canada," says Joseph Antos, a healthcare expert at the American Enterprise Institute.

Drug-discount cards are clearly a boon to seniors, but because they're market-oriented and not a huge government-run program, they're saving money for the rest of us, too. The cards will cost taxpayers $5.1 billion over 18 months, a relative bargain.

Compare that with the budget-busting drug entitlement scheduled to begin in 2006. It will cost taxpayers $43.7 billion in its first year alone and steadily increase every year thereafter. The Congressional Budget Office estimates years 11 through 20 of the entitlement will cost between $1.7 and $2 trillion with no end to cost increases in sight.

The entitlement's exploding costs will bust not only the federal government's budget, but the personal budget of taxpayers who have to cover the bill in decades to come. Countless grandchildren of those seniors will have difficulty paying for their higher education, or even their own healthcare bills, because of the added fiscal burden.

The card program could help here, though. Once seniors realize how well it works, they'll likely want to keep it. And that would make the entitlement unnecessary, saving hundreds of billions of dollars in the long term.

Opponents of these cards seem to have their own agenda, whether it's scaring seniors or wanting the cards to fail because they represent a step away from nationalized health care.

But behind the fear mongering, seniors are enjoying an opportunity to save hundreds, if not thousands, of dollars on their prescriptions. Whether they take that opportunity is affected by what they hear from politicians. It's time the critics started telling the truth -- and stopped misdiagnosing the Medicare drug-discount card program.

Derek Hunter is a researcher in the Center for Health Policy Studies at The Heritage Foundation.

Distributed nationally on the Knight-Ridder Tribune Wire

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