Medicare Part "D" For "Disaster"
A rare bit of good news recently trickled out about Medicare's new
prescription-drug entitlement. The entitlement will cost $678
billion over 10 years, rather than the $737 billion previously
The reason for this "savings"? It's partly that fewer seniors have
signed up for the entitlement than the 33 million the government
expected. And out of the 24 million now enrolled, only 3.6 million
actually "signed up" -- the rest had no choice.
But this shortfall is really no surprise. So far, the program has
been a disaster.
"Pharmacists decry Medicare chaos," blared a recent headline in the
Daily Tennessean. The article beneath it is typical of those
published in the days after the new entitlement took effect:
pharmacists spending hours on hold with the government only to be
cut off, seniors having to pay thousands more than expected for
their prescriptions, and some even going without drugs.
Those seniors who have suffered most are the so-called "dual
eligibles," needy seniors who had previously received drug coverage
under their states' Medicaid programs. They had no choice: On Jan.
1, they were dumped into the Medicare drug entitlement.
The Tennessean reports that this has been "an out-and-out
catastrophe for the poor." As an advocate for seniors told The New
York Times, "All this is doing is harming the people who had
coverage -- America's most vulnerable citizens."
With all these horror stories in the press, better-off seniors, who
can choose whether to join the new entitlement, have avoided
signing up. Thus, the savings.
The rest of the savings come from the part of the entitlement
that's been most maligned by its political opponents. Because the
entitlement relies on the market and insurance companies to provide
drug benefits, instead of the government, competition has driven
premiums 20 percent lower than expected.
That's the good news. The bad news is that all this chaos,
suffering and catastrophe were predictable. Indeed, Robert Moffit
of The Heritage Foundation predicted it in a policy paper published
"Millions of seniors will lose their existing drug coverage, have
their existing coverage degraded, or find themselves struggling
with congressionally engineered gaps in drug coverage. Many who
find themselves in these gaps will be among the sickest and most
vulnerable members of the Medicare population."
That Heritage paper concluded that the new entitlement is a
"massive new experiment in central planning." As the world should
have learned well over the past century, central planning doesn't
This mess was avoidable. Back in 2003, when Congress began work on
the drug entitlement, it started with a real problem: Some seniors
couldn't afford to pay for prescription drugs, harming their health
and ultimately driving up the cost of Medicare.
The obvious solution was to target aid to only those seniors
unable to afford drug coverage. Most seniors already have it (often
through their former employers), and this coverage tends to be more
generous than what Medicare offers. The neediest seniors, along
with many seniors in nursing homes, already received drug coverage
through Medicaid. This left a narrow group of seniors who couldn't
afford coverage and weren't already receiving it from Medicaid.
Congress could have reached them with a simple direct
Instead, Congress created a universal entitlement for every senior
in the country. The cost is massive -- even with the latest
savings, $678 billion over 10 years isn't exactly peanuts -- and
the program may never work right. By all appearances, the drug
benefit passed in 2003 is so unwieldy and complicated that the
Medicare bureaucracy can't safely administer it.
And the worst is yet to come. While the initial kinks may be
ironed out eventually, without substantial reform, the massive drug
entitlement will never work efficiently. Meanwhile, more retirees
will be dumped into the entitlement as their former employers use
it as an excuse to discontinue their drug coverage. And as the year
progresses, seniors will fall into the entitlement's notorious
"doughnut hole," where they must pay for all drugs out-of-pocket --
as if they had no coverage at all.
Ironically, the failure of the drug entitlement has emboldened
those who seek a larger role for government in health care.
Psychologists describe this kind of response as "cognitive
dissonance," when a belief is often held so firmly no contrary
evidence can budge it. Judging by the amount of time members of
Congress and the administration have spent touting the new
entitlement, almost all of Washington suffers from this
Andrew M. Grossman is a senior Web editor at The Heritage
Foundation (heritage.org), a Washington-based public policy
Distributed nationally on the Knight-Ridder Tribune wire