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Press Release

Born on the Fourth of July


In the haunting movie Born on the Fourth of July, Tom Cruise was gripping as a patriotic young soldier turned crippled and disillusioned after Vietnam.

This Fourth of July, Congress and the Bush Administration are directing a different movie, one that stars wounded and disillusioned conservatives. That’s because the GOP establishment is working hand-in-hand with Ted Kennedy to create a new entitlement that massively expands Medicare and the reach of the federal government. Indeed, disillusionment may not fully capture the anger as limited government activists watch Congress race to complete the Prescription Drug and Medicare Improvement Act before the July recess.

Even without this new entitlement, Medicare will go bankrupt within the next few decades. So, instead of reform, Congress in its wisdom is adding prescription drug coverage, which will speed Medicare towards complete bankruptcy. The $400 billion cost estimate (over ten years) for the drug benefit is surely not enough, just as Medicare's costs today far exceed original estimates. (Medicare spending today is more than ten times greater than planned.) In fact, by the estimates of Congressman Jeff Flake (R-AZ), the House plan will add $7.8 trillion to Medicare's unfunded liability. That’s more than the entire national debt! This plan contains the kind of wanton malfeasance that gets corporate executives thrown in prison.

The actual policy debate is as murky as the Mekong River and revolves around the key question: what is the proper price for the drug benefit? The distribution of benefits will depend on how much a senior spends on drugs, and Congress is creating a bizarre zig-zag of coverage, with gaps called “donut holes” followed by more coverage. Once the discussion turns to “donut holes,” you realize the policy debate is completely upside down. The liberals are demanding that the new drug benefit extend to upper income seniors, while the conservatives want to target the group of seniors who currently lack coverage.

Certainly, it isn’t right or even reasonable to tax working families to pay the drug benefits of wealthy retirees, especially when most of these seniors already pay for private drug coverage. In fact, about 75 percent of America’s seniors already have private drug insurance. To this extent, creating the prescription drug benefit is an idea looking to solve a problem that doesn’t exist.

What’s more, the current proposals reimburse health care providers based on the traditional Medicare “price benchmark,” which is really just a government price mandate that already has many doctors dropping Medicare patients. According to a House conservative leader, Congressman John Shadegg (R-AZ), the House and Senate bills currently “contain no serious reforms to control cost, improve Medicare or provide choice.” And as bad as the Republican plans are, the Democrat versions are even worse.

CSE believes Medicare reform should give seniors the ability to choose between traditional fee-for-service Medicare and many competing private health care providers. This approach will bring innovation and lower costs, and will help get the government out of the business of pricing mandates for specific medical procedures. Along these lines, modeling the Medicare program on the current health care system used by federal employees would be a good start. Further, Congress should also tackle other measures that would reduce the cost of prescription drugs, such as reforming the Food and Drug Administration and limiting frivolous lawsuits against drug manufacturers.

Until then, true conservatives should walk out on the Medicare disaster now playing in Congress and the Administration.