October 27, 2004
By Derek Hunter
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
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
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
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
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
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.
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