June 14, 2005 | Executive Summary on Health Care
Members of Congress deserve an early warning: On January 1, 2006, the huge Medicare prescription drug entitlement goes into effect. At issue is whether or not the Medicare bureaucracy can administer the program without disrupting the lives of millions of senior citizens and within the rigid requirements and tight timetables established by Congress.
Over the next several months, the Medicare bureaucracy must accomplish an enormous number of difficult tasks that entail large risks to seniors if they are not done right. One thing is certain: If there are glitches in the Medicare drug implementation next year, Congress can expect angry calls and letters.
In January 2005, the Centers for Medicare and Medicaid Services (CMS) issued 1,162 pages of final regulations governing the administration of the Medicare prescription drug entitlement. This massive regulatory output is the culmination of months of preliminary work to implement Congress's latest, and perhaps most ambitious, experiment in government central planning. Congress authorized $1 billion to fund implementation of this program, including outreach and education of seniors.
Multiple Problems. Over the next few months, Members of Congress, seniors, and taxpayers will have an opportunity to see how well the federal government regulates the financing and delivery of prescription drugs. In a program of this size, one can expect a variety of administrative glitches. But the most serious problems, rooted in the Medicare law itself, are already surfacing:
A Better Policy. Short of outright repeal, Congress could at least delay the drug entitlement and avoid the massive cost and disruption guaranteed by its implementation. To this end, Representative Jeff Flake (R-AZ) has proposed the Prescription Drug COST (Control Overspending to Save Taxpayers) Containment Act of 2005 (H.R. 1382). The bill would delay the onset of the drug entitlement for one year, retain Medicaid drug coverage for the dual-eligible beneficiaries in 2006 under current terms and conditions, and continue to provide the Medicare drug discount card and subsidies to low-income persons for another year.
A delay of a year or longer would not only save tens of billions of dollars in the first year alone, but also enable Congress to take the time to fashion a rational and responsible drug benefit and to determine precisely how the taxpayers and seniors are going to finance it. Meanwhile, Congress can still target generous help to seniors who do not have drug coverage or who need direct help in purchasing drug coverage.
Robert E. Moffit, Ph.D., is Director of the Center for Health Policy Studies at The Heritage Foundation.