Bad Political Medicine
Will the Medicare bill help the GOP next year? Don't count on it.
Wall Street Journal
Republicans and their friends are busy congratulating themselves that their new Medicare prescription drug benefit is going to be a huge political windfall. We hate to be spoilsports, but perhaps they need some subsidized medication.
Senator Jim Talent of Missouri, for example, visited us a while back and waxed lyrical about the GOP becoming "the party of governance." (Try the party of government.) The editorialists at the Washington Times have fantasized that by establishing the party's compassionate conservative bona fides, such a bill might pave the way for a "permanent Republican majority."
One reason GOP leaders are selling the politics is because they've had to concede that their policy could be much better than it is. So they are telling reluctant House conservatives that the bill will pay big dividends in November 2004. What's more, it will establish the party's credibility on health care issues for a generation to come. Perhaps advocates of this theory would care to name any other entitlement, in any country, that has ever worked to the advantage of a party claiming to believe in limited government.
Republicans ought to be spooked that Democrats clearly calculate they have nothing to lose by vehemently opposing this bill. Democrats want to tarnish any GOP victory, to be sure. But they are also preparing the ground to spend the next year--no, 20 years--demagoguing the drug benefit as inadequate. And trust us, the GOP's rent-a-friends in the AARP will soon return to lobbying alongside their more natural big-government allies on the left.
There is every reason to believe these attacks will resonate. For starters, seniors with low drug expenses will be net losers under the GOP bill once they pay their premiums and deductible. Yet they will be pressured to sign up by stiff late enrollment penalties. Worse, many seniors will have their gold-plated private retiree coverage canceled, and end up with the inferior government benefit.
We're told the Members heard plenty of such objections when they went home for August recess, and a number of polls indicate that the worries are widespread. A recent survey commissioned by the Club for Growth finds that 81% of seniors with drug coverage are satisfied with it. More than 77% overall "disapprove" of drug legislation when told of Congressional Budget Office estimates that a third of seniors with employer coverage could lose it. And 71% disapprove when told the average employer-covered senior might face $500 more per year in premiums and copayments than under the current system.
There's also the matter of trillions of new dollars in spending that will only increase pressure to raise taxes to pay for it. A report earlier this year from the White House Office of Management and Budget notes that covering the projected shortfall of Medicare and Social Security would require the immediate seizure of half the nation's household wealth, or a permanent increase in payroll taxes to 22.4%. And that's before any drug benefit. Republicans may soon find themselves becoming the tax collectors for their own welfare state.
On the broader issue of the GOP's health care credibility, this bill is also fraught with enormous risks. It's not clear that the private, drug-only insurers envisaged here will even show up to the party, since the business proposition appears to offer more risk than upside. Private comprehensive insurers have at least been shown to be a workable option. But without drug benefits as a unique selling point, enrollment there may fall far short of what the Bush Administration expects. Either failure could do serious and long-term harm to the cause of market-oriented health-care reform.
One final GOP political pitch is that this is the only way to get Health Savings Accounts. But HSAs passed 237-191 on the House floor as a free-standing bill last June. If Republicans can't do a big Medicare bill right, it would be a lot less politically risky for them to package HSAs with a senior drug discount card, a low-income subsidy and some money for doctors--and return to fight another day.
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