An Adult Response to the Growing Medicare Mess
05/13/05 10:18 AM As newly christened deficit hawks sweat whether they can bring themselves to support personal accounts in Social Security, they overlook the elephant in the entitlement-spending room. As Robert J. Samuelson, the prominent economist who writes for The Washington Post, recently remarked, when Congress approved the universal Medicare drug entitlement, it approved the largest single spending increase since the Lyndon Johnson’s Great Society, complete with massive deficit financing.
This is may be understandable. After 2003’s two-semester push on Medicare, most Members of Congress think they passed the class and never want to crack that textbook ever again.
But the bad news, which is clearer and clearer every day, may force them to. Medicare’s Trustees now say that the program is in the hole for $29.7 trillion in total. This represents Medicare benefits promised to current and future retirees that nobody has any idea how to paid for. It’s no great surprise that Members of Congress don’t want to discuss whether and how, precisely, they’re going to sock young American taxpayers with this bill.
The alert and attentive may have noticed that the latest Medicare Trustees Report shows that Medicare’s unfunded liabilities jumped roughly $2 trillion in just one year. Indeed, the unfunded liability for the Medicare drug benefit alone jumped from $8.1 trillion to $8.7 trillion. So, in just one year, the long-term estimates of the drug entitlement increased a whopping $600 billion—imagine what that number will be next year! For now, Congress has turned its back: worst comes to worst, the kids today—twenty-somethings who pay about as much attention to entitlement costs as members of Congress—will foot the big bills tomorrow.
Some Members of Congress, however, see the Medicare drug benefit for what it is: a ticking time bomb set to wreak havoc on the budget and shoot future tax rates sky-high. But even among them, there may be only one adult who recognizes that the Medicare problem is not just a matter of dollars, but policy.
While some of his colleagues would wreak havoc on all Americans’ health care in order to wring a few dollars out of Medicare, Rep. Jeff Flake (R-AZ) sees that the problem is more fundamental. Flake knows that tinkering around the edges of the drug benefit—say, by letting the government negotiate drug prices—won’t fill much of Medicare’s long-term fiscal hole and that it’s dangerous to boot. What’s needed instead is a rethink on the fundamentals. And that is what Flake proposes.
Flake’s Medicare Prescription Drug COST Containment Act (H.R. 1382) has three interlocking parts, but it can be explained in one easy sentence: put off the hideously expensive and complicated Medicare prescription drug benefit until Congress can figure out a way to pay for it. Flake’s bill would delay the drug benefit for one year; it would extend the current Medicare prescription drug discount card program, which was slow to take off but has proven effective at channeling aid to those who need it most; and it would maintain funding for seniors today receiving coverage through Medicaid who would have been dropped into the new program. Not only would Flake’s bill push back the benefit, but it would also point the way to a promising alternative, built on the drug discount card.
So far, co-sponsors for the legislation are few, but that could change overnight. The federal and state bureaucracies have high hurdles to jump if they’re to get all the implementation details in place by January 1, 2006, when the drug benefit is set to go into effect. Some states are already complaining that they’ll lose out on the deal, relative to Medicaid today—these complaints will become clamorous as states do their budgets for the year ahead. Already, companies are beginning to notify their retirees to get ready to be dumped into the federal program—which provides worse coverage in almost every case. And word of the dreaded “doughnut hole” is starting to spread beyond Washington to seniors who don’t like the idea one bit. The stars are aligning, and Members of Congress may be franticly searching for an easy way out not too long from now. They may find that Flake’s is the one that best fits their pressing needs.
And most encouragingly, more Members of Congress seem to be slowly waking up to the true cost of their irresponsible handiwork. A year’s delay could give them the chance to avoid all this mess, study the issue calmly, and this time get it right. Flake’s got the right idea.
heritage.org |
