New Coke and Medicare

Bruce Bartlett
|
Posted: Jul 20, 2004 12:00 AM

Back in 1985, the Coca-Cola Co. made a major screw-up. It decided to get rid of its classic cola drink and replace it with something sweeter called New Coke. The company had extensively market-tested the new product and was convinced that it would lead to higher sales. But when consumers found out that they would lose the Coke they had loved for 100 years, there was a vast outcry and the company was forced to dump New Coke and bring back the old formula.

 Republicans have made a similar screw-up in adding a prescription drug benefit to Medicare. They looked at polls showing strong support for a Medicare drug benefit and concluded that enactment of such a program would make them more popular. But as the Coca-Cola Co. discovered, people may tell market researchers one thing, but when confronted with a new reality they can quickly change their minds.

 So far, the data all not only show that Republicans have reaped no political benefit from the Medicare expansion, but they are losing support because of it. Ironically, those who will benefit directly from the new drug subsidies, the elderly, are the most hostile. In the process, Republicans have thrown away whatever credibility they had for fiscal responsibility, and are now actively opposed by many conservatives disgusted by their budgetary profligacy.

 A Kaiser Family Foundation poll in April shows only 28 percent support overall for the prescription drug plan, with just 24 percent of those over age 65 approving. A Gallup poll in March shows support for the prescription drug bill falling from 52 percent in December to 41 percent among all Americans, and from 46 percent to 36 percent among those over age 65. Even a majority of members of AARP, which strongly supported the new law, are opposed to it.

 A December Gallup poll shows why support is falling. Among the elderly, 73 percent thought the new program wouldn't go far enough in helping them pay for prescription drugs. In other words, the elderly were guaranteed to be disappointed by the drug program no matter how much it cost. Unless it gave them 100 percent of whatever drugs they wanted for free, they were going to think that they could have done better. And, of course, the Democrats have been highly vocal in telling them that their program would have been better.

 The prescription drug discount cards, which the administration rushed out in order to give the elderly some tangible benefit before the election, have also proved a bust. According to a study by the Kaiser Family Foundation, seniors find them confusing and insufficient for their needs. Adding to dismay about the prescription drug legislation is the fact that drug prices continue to rise rapidly, thus eroding the value of discounts from the drug cards. According to AARP, prices for drugs frequently used by seniors have risen faster since the new law took effect than for any previous period.

 Finally, the administration has suffered from the strong-arm tactics it used to ram the drug legislation through Congress. A recent study by Common Cause details these tactics, including an attempt to bribe Rep. Nick Smith, R-Mich, censoring C-SPAN cameras during the vote and withholding critical information about the cost of the program.

 This last point was investigated by the inspector general of the Department of Health and Human Services, who confirmed that career staffers in the department were threatened with disciplinary action should anyone disclose to Congress that the drug bill would cost $134 billion more than it thought. As The Wall Street Journal noted, it is "undeniable" that the Medicare bill would not have passed had the higher cost estimate been known.

 Consequently, Republicans are now starting to realize -- as Coca-Cola did -- that they screwed-up big time. As columnist Robert Novak reports, "Senior administration officials privately admit that last year's prescription drug bill was a disaster substantively and politically."

 It is here where we really see the difference between the public sector and the private sector. When Coca-Cola executives realized that they had made a big mistake, they switched gears, brought back Classic Coke and eventually deep-sixed New Coke. They had no choice in a competitive marketplace. But government officials never admit error. So Republicans seem intent on slogging the benefits of a new drug benefit that will cost trillions of dollars for people who don't like it.

 But there may be hope. According to the National Journal, Democrats in Congress are promising to "repeal and replace" the drug plan next year. It notes that this was successfully done in 1988 after Congress passed a catastrophic health coverage bill that seniors rebelled against. If Republicans are smart, they will take Democrats up on their offer and kill the drug bill before it becomes cemented in place for all time.