August 2, 2004

August 2, 2004 | WebMemo on Health Care

Bitter Pills #13: How The Government Fixes A Problem (With YourMoney)

Fixing one problem can sometimes create another. Just ask federal lawmakers about their attempts to add a prescription drug benefit to Medicare.

The problem? Some Medicare patients struggled to afford prescription drugs. The solution: Lawmakers passed a law last year that offered drug coverage to all Medicare patients-even though most already had drug coverage from their former employers.

Enter a new problem: Many companies now are tempted to cut costs and increase profits by dropping senior drug benefits and dumping their retirees into the Medicare program.

So, Congress tried to solve that problem by offering money to companies that keep their drug benefits for retirees. The exact amount is still being worked out, but the July 28 Wall Street Journal reported it ranges from $611 to $940 per covered retiree. A company with just 100 retirees could get up to $94,000 of your tax money to keep the drug coverage it already offers.

One could call this a "bribe." But in Washington, it's a "subsidy"- and that's a problem in and of itself. For real solutions to Medicare problems, read this from Heritage Foundation health care expert Robert Moffit: http://www.heritage.org/Research/HealthCare/bg1750.cfm.

For more information or to receive an e-mail version of "Bitter Pills," contact chris.kennedy@heritage.org 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).

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