June 23, 2003
"Prescription Drug Bill Makes Only Politicians Feel Better"--An Op-Ed by Prof. Mashaw and Prof. Marmor
(This essay originally appeared in the June 17, 2003, edition of the Los Angeles Times. It was subsequently reprinted in Newsday and the Philadelphia Inquirer, among other publications.)
Prescription Drug Bill Makes Only Politicians Feel Better
By Theodore Marmor, Professor of Public Policy and Management, School of Management, Professor of Political Science, and Professor (Adjunct) of Law, and Jerry L. Mashaw, Sterling Professor of Law
Not since Medicare was enacted in June 1965 has the program been front-page news -- and the source of such confusion.
Now, as then, critics claim the reform package is inadequate or misguided, supporters use the language of "acceptable compromise" to soothe worried constituents, and most Americans do not have the foggiest idea what the reform would mean.
In 1965, the enactment of Medicare -- a health-care insurance program for people over age 65 -- was assured because the Democratic Party had routed the Republicans the year before and Congress was overwhelmingly Democratic. In 2003, changes are again being driven by politics, but this time by the increasing potency of the prescription-drug benefit as a weapon of political warfare that is threatening both Democrats and Republicans if it is not solved.
The Medicare prescription drug benefit issue dominated campaigns for the Senate, the House and, to a lesser extent, the presidency during the last few election cycles. With drug prices escalating and seniors being hit hard, the battle for the votes of the elderly often revolved around this issue.
The result was a confused jumble of Republican and Democratic candidates slamming each other with their competing visions. Now, to take it off the table, they've decided to reach a compromise.
To do so, both were prepared to sacrifice crucial features of their traditional policy aspirations. The Democrats agreed to give up a generous drug benefit that would have paid for the lion's share of pharmaceutical bills. The Republicans agreed to a strategic compromise, no longer insisting that the drug benefit be only for those willing to join private health insurance plans.
The prescription drug coverage that will probably emerge from this Congress will disappoint almost every likely beneficiary. Why? The concessions required of both parties made certain that the available funds for reform could not finance the more generous benefits the parties had advertised.
The Bush administration insisted on a $400-billion budget limit over 10 years, one-half the amount the Democratic reform had presumed. The Republicans had to accept the Democratic demand that benefits be available to all the elderly and disabled, not just those willing to join private insurance plans. All the benefit plans under consideration thus include more eligible recipients than the Republicans had wanted and a much lower budget constraint than the Democrats had presumed.
The result: Either reform would address only catastrophic expenses in the first instance or, to give the impression of wider coverage, it would have convoluted, almost unintelligible, sharing of costs with patients.
We are getting the latter, Rube Goldberg plan. The Senate version of prescription drug coverage features premiums set by federal guidelines, deductibles ($275 a year), co-insurance (50% cost-sharing by the recipients up to $4,500 a year) and gaps in coverage (no coverage from $4,500 to $5,800 in drug expenditures).
Few Medicare beneficiaries will be able to make sense of these benefits. They provide neither full protection against financial catastrophe from drug outlays nor the cost savings of a broader plan with workable cost controls.
But is this muddle a step in the right direction, a step likely to lead to revisions over time that would provide adequate coverage at reasonable cost? Medicare's history of incremental reform in hospital and medical benefits suggests skepticism.
Partial measures on this large a scale typically make incremental adjustments more difficult, because the beneficiaries who are financially able to buy additional gap-filling insurance diminish the squeaky wheels who would pressure Washington for reform. Yet events may force later revision.
The plan is so complex that the government may not be able to implement what Congress passes. And no one knows whether private insurers will believe that participation will be profitable.
The compromise prescription drug bill poised to pass in this Congress fails to achieve anyone's sensible goals. Whether initial failure will breed later success is far less certain.
Theodore Marmor and Jerry L. Mashaw teach health law and policy at Yale Law School. Marmor is the author of "The Politics of, Medicare" (Aldine de Gruyter; 2nd edition, 2000). Mashaw is author of, "True Security: Rethinking American Social Insurance" (Yale, University Press, 2000).