"If you put the federal government in charge of the Sahara Desert," Nobel economist Milton Friedman once quipped, "in five years there'd be a shortage of sand." Friedman's admonition is especially pertinent to the ongoing effort by Senate liberals to give federal bureaucrats a leading role in setting the price of drugs for seniors.
Their track record on this front, not surprisingly, is appalling.
Two years ago, Senate liberals, led by Sen. Majority Whip Dick Durbin (D.-Ill.), sought to head off implementation of the new federal drug entitlement for seniors (not a bad idea, given that it's available to even the wealthiest seniors and adds trillions to our long-term debt). But they did this for the wrong reasons and pursued the wrong remedy.
Durbin bemoaned the absence of a heavy regulatory role for Uncle Sam. Left to negotiate freely, insurers that offer drug coverage under Medicare, he feared, would conspire with drug manufacturers to gouge seniors, and send the cost of prescription drugs under the program "through the roof."
The best way to contain those costs, Durbin argued, was a price control -- mandating the price insurers could charge seniors for certain Medicare drug plans. His legislation would have instructed the Secretary of the Department of Health and Human Services "to set a uniform national premium of $35 for the first year" and "to negotiate group purchasing agreements" on behalf of seniors.
Happily, Durbin's legislation went nowhere. He and his colleagues quietly dropped the $35 price control on premiums. Last week, 41 Senate Republicans defeated a procedural motion to stifle debate and floor amendments on this bill, disappointing a coalition of 47 Democrats, Socialist Bernie Sanders (Vt.), six moderate Republicans, and Independent Joe Lieberman (Conn.).
Raining on the liberals' parade is the fact that the competitive features of the new drug law have exceeded everyone's expectations. At $22 per month, the average premium for plans this year is more than 40% below the projected monthly cost of $37 and is actually lower than the average cost last year. To taxpayers, this translates into annual savings of $13- billion this year and has caused government bean counters to lower projected Medicare costs by $189-billion over the next decade. Satisfaction levels among seniors who have these plans, meanwhile, tops 80%.