Tucson, Arizona Thursday, 27 June 2002
Well-heeled Grans can afford meds
By Rich Lowry
Americans ages 65 and over spend, on average, about $700
a year on prescription drugs. This is a "crisis," and Congress is tripping all over itself to pick up the tab.
But consider all the other senior-
citizen "crises" that are going woefully unaddressed:
Seniors, on average, spend $1,200 a year on dining out. The elderly could save so much on "blue-plate" specials if only the government paid the tab.
Seniors drop $800 a year on furnishings. How many recliners - perfect for pushing back and watching the Golf Channel - go unbought because Congress refuses to help pay this bill?
Sixty-five-and-overs spend $1,000 a year on entertainment. But we persist in forcing them to pay for their own subscriptions to large-print editions of Reader's Digest.
Yes, prescription drugs are more important than all these other things, but that doesn't make most of the senior citizens supporting a new federal drug entitlement any less whiny or spoiled.
There are indeed seniors who need help buying drugs.
About a third of seniors don't have drug coverage (which is not provided by Medicare), and some undetermined number actually have trouble paying for their drug bill.
These seniors have to be, on the one hand, not so poor or sick that they are covered by Medicaid but, on the other hand, not so wealthy that they can afford their own coverage.
Probably 10 to 15 percent of the elderly fit this description. It would be simple to create a food-stamp-style subsidy for this group and a government insurance program to protect them from truly catastrophic drug expenses.
But merely aiding the needy doesn't do much to please the overwhelming majority of reasonably well-off elderly.
For that, you need a generous new benefit for all seniors, which is exactly what congressional Democrats are proposing.
Never mind that a new benefit as part of Medicare will inevitably mean price controls that might end America's wondrous boom in innovative drugs. It doesn't get much more cynical than this.
The prices for pharmaceuticals
are not, rhetoric on the floor of Congress notwithstanding, spiraling out
of control.
According to John Calfee of the American Enterprise Institute, spending on pharmaceuticals is a smaller share of overall health-care expenditures than in the early 1960s.
It is true that drug spending has been increasing, but this is not because drug companies are gouging Granny.
Most of the new spending is a result not of price increases, but of the simple increase in the number of drugs that people are buying.
This is a good thing. According to the Manhattan Institute's Robert Goldberg, studies show that every dollar spent on drugs means $4 less spent on hospital visits.
All that said, it is still silly that Medicare doesn't have a prescription-drug benefit. But the problem is that Medicare, as currently constituted, is broken.
Its payment system is so expensive that it creates inevitable pressure for government price controls on whatever it touches - doctors, hospitals, HMOs (all of which are fleeing Medicare as a result).
Simply adding a drug benefit to an unreformed Medicare - as Democrats would in their proposal that will cost almost $1 trillion over 10 years - will therefore inevitably mean drug price controls.
This will be a disaster. Goldberg reports that the United States developed nine significant new beta-blocking heart drugs in the 1980s, while France developed 14 and Japan 30.
Today, price controls have crushed innovation in France and Japan, while the United States leads the world in new heart therapies.
Controls had the same effect in Britain. "In 1983," Goldberg writes, "three of the 10 best-selling new products worldwide came from the United Kingdom. Today, U.K. companies have no drug among the top 10."
So, the health of everyone might suffer because Democrats want to pander to the elderly.
Would that someone in Washington had the courage to say to comfortable seniors, "Granny, pay for your own damn drugs."
* Rich Lowry is editor of the National Review, 215 Lexington Ave., New York, NY 10016; e-mail: comments.lowry@nationalreview.com. |
