Free Medicine, Ho Ho Ho

Posted: Jun 25, 2003 12:00 AM

5he tangle of bills and sub-bills, the rhetoric of imperatives and velleities swirling about Congress, remind us of the evanescence of conservative doctrine. What happened, of course, is that in the presidential election of 2000, the Democrat, Mr. Gore, promised he would bring free drugs to the aging population. The winner, Mr. Bush, wants to preempt future charges that he did not come up with a program of his own.

Politics that involve the disbursement of money are exercises in redistribution. Free medicine, as defined in this space years ago, is medicine that somebody else pays for.

Conservative analysis begins by attempting to trace the itinerary of dollars on a nationwide scale. John Esposito, a 65-year-old who has been earning $35,000 per year and is now paying $400 per month for prescription drugs is, emblematically, the object of concern. How to help him out?

He can't be helped out except by taking from others. If government steps forward with a program to reimburse him one half of his $400 monthly expenditure on drugs, the net subsidy of $200 has to be found. Where?

One means, of course, is by borrowing. You pay his drug bill and sell Treasury bonds to make up the cost (estimated, in static analysis done on the pending bill backed by President Bush, at $400 billion over ten years). Or you can devise creepy-crawly taxes that contribute to the treasury sufficient to offset the extra expenses. Most notorious of these is the tobacco tax, but there are others, including tariffs and, of course, the income tax. But immediately to impose on Esposito a $200 per month increase in income tax quite ruins the apparent advantage he thought he was getting out of the drug bill.

Another approach is to attempt to lower the cost of those drugs. This is difficult to do except to the extent that the administrative cost can be trimmed. Enter the Republicans, who favor running as much of the dollar traffic as possible through private health plans. There are options on the table in Congress on the distribution of benefits, on the contributions expected from John Esposito, on the upper limits of the cost of drugs he can be covered for, and so on.

The Republican focus should, of course, include that solvency promised by Mr. Bush when he was campaigning for president, which is different from his focus as a campaigner for reelection.

Now John Esposito, surveying the legislation, will attempt to calculate the extent to which he benefits from it. Apparently he will benefit a great deal, if his drug costs are cut in half. But he will require special skills, more skills, in point of fact, than any economic analyst has, successfully to trace the ancillary costs of the $40 billion per year program. The principal one of these is, of course, inflation. Somebody has to pay the cost of the subsidy, even if it is everybody else except Esposito, and the effect on the paying class is to displace energy from private enterprise, to paying more money into the federal government. And, of course, individual states, with their individual programs, tie in to the federal program in their own way, and Esposito can't be absolutely sure exactly how much of the apparent subsidy he is in fact paying for by invisible costs, but not, like the income tax, unsightly, if Congress can figure out a way to do this.

The GOP thinking machine lost ground on the whole health issue years ago when it adopted universalization. There is no reason for wealthier citizens to pass on the cost of their medicine. When such costs become truly unbearable, the catastrophic protection concept becomes relevant. If help were to become available after 10 percent of one's income was exceeded by health costs, you would preserve the idea of proportionality, and competition would set in immediately at the consumer level. If, up until he spent over $3,500 per year on doctors and drugs, Esposito had to pay for them himself, he would measure carefully his consumption, and the price asked by the providers. The Ross Perots could not, one assumes, ever achieve health costs exceeding 10 percent of their income, and so would not stand to benefit from whatever it is Congress finally comes up with.

If there were a drug that required politicians to divulge the true reason for their legislation, that drug should be free, and compulsory.