We should all fear Medicare 'reform'

Posted: Jun 23, 2003 12:00 AM

Call it the law of unintended consequences. When the government creates an entitlement, that entitlement has a way of quickly growing out of control. Then, it’s almost impossible to fix the problems that arise.

 Consider Social Security. The program was launched in 1935 to provide assistance to the neediest of elderly Americans. Today, it serves as a supplemental retirement plan for all Americans.

Yet while the number of people on Social Security has soared, the number of people paying for the program has plunged. In 1950, there were 16 taxpayers for every recipient. Today there are three taxpayers for every recipient. And in 2030, there will be only two taxpayers for every recipient, according to Heritage Foundation research. Without reforms, the system is certain to go broke.

 Despite its problems, lawmakers seem intent on ignoring Social Security. In effect, they are kicking the can down the road for future congresses and future generations to deal with. Someday we’ll all pay the bills.

A similar thing is happening with another popular entitlement: Medicare. Instead of fixing the problems the program already has, lawmakers are about to make the situation worse by adding an expensive prescription drug benefit.

Right now, three quarters of all seniors have drug coverage either through an employer (or former employer) or through a supplemental plan they’ve purchased themselves. That doesn’t mean we should ignore the remaining 25 percent. Congress could and should fashion a prescription drug benefit to help those people out. But that’s not what lawmakers are doing.
Instead, the Senate is racing to pass a bill that provides the same generous Medicare drug benefit to all seniors, regardless of their income or needs. The speed they are moving at is suspicious.

Major provisions of the bill were first made available to members of the Senate Finance Committee on June 10 -- just two days before they were forced to vote on the bill by Committee Chairman Charles Grassley, R-Iowa. Senate Majority Leader Bill Frist has said he’d like the bill passed by July 4, in keeping with a request from President Bush.

But what’s the hurry? The bill won’t take effect until 2006, so lawmakers have plenty of time. And it’s important they get this right. Congress only races when it wants to get something finished before voters have a chance to examine it.

True reform would make Medicare solvent for decades to come, and also add a prescription drug benefit for those who need it.

But if that benefit is tacked on without reform, it will be impossible to fix the program. Once prescription drugs are added to Medicare, the only changes that will be possible are changes that make the system even more expensive.

Today, the Congressional Budget Office estimates that adding a prescription drug benefit to Medicare would cost some $400 billion over the next decade. But that’s the least it could possibly cost.

Some liberals, including Sen. Ted Kennedy, D-Mass., have already said they plan to make the drug benefit more generous once it’s enacted. Look for costs to skyrocket well beyond $400 billion over the next decade. And then imagine what happens when baby boomers start retiring on to Medicare in 2013. Talk about a fiscal train wreck!

Congress has a good model for reform right in front of it. Lawmakers should draw up a new federal program that mirrors the Federal Employees Health Benefit Program, the one that covers them and their staffs.

This program would provide a wide choice of health-care plans for seniors. All those plans would have a prescription drug benefit. The difference would be cost. Seniors who want a health-care plan that covers everything would pay a little more, while those who could live without all the bells and whistles would pay much less. And seniors who wanted to keep their current coverage could do that, too.

If the current Senate bill becomes law, seniors will actually lose options. According to the CBO, at least one third of them will end up losing the health-care plans they have now.

Let’s not race into a mistake we’ll spend decades paying for. It’s time to really reform, not simply expand, Medicare.