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Issue Analysis

    Issue Analysis 110 - Policy Prescriptions vs. Policy Palliatives in the Prescription Drug Debate

    09/27/2000

    America’s senior citizens have become increasingly dependent upon prescription drugs for their heath care needs. Unfortunately, the hyper-centralized design of Medicare has prevented a prescription drug benefit from becoming readily available to seniors. Several bills currently under consideration in Congress offer possible remedies. Vice President Al Gore and Gov. George W. Bush of Texas also have offered plans to address this issue.

    The major difference between the plans presented by Messrs. Gore and Bush is the way in which a prescription drug benefit would be administered. While both concede the oft-repeated line, “If we were creating Medicare today, it would be unthinkable to deny coverage for prescription drugs,” their plans underscore fundamental differences in philosophy.

    Vice President Gore’s plan embraces the current hyper-centralized model by expanding it. Conversely, Gov. Bush addresses Medicare’s creakiness and inability to adapt to medical innovation by placing a prescription drug benefit in the context of overall Medicare reform. This stark difference has profound implications for the future. Health Care Financing Administration (HCFA) actuaries predict that prescription drug costs will grow by 9.8 percent annually for the next seven years and continue to grow as a percentage of total health expenditures. Considering that Medicare in its current form is facing bankruptcy by 2025, to add a benefit with the potential for exploding costs without fundamental reform would be disastrous.

    It is imperative that any attempt to address the prescription drug problem does not bankrupt the entire system in the process; such a solution would be akin to burning down a house to alleviate the termite problem.

    It is imperative that any attempt to address the prescription drug problem does not bankrupt the entire system in the process; such a solution would be akin to burning down a house to alleviate the termite problem. Instead, Congress should act to overhaul Medicare in its entirety so as to provide modern benefits to today’s seniors, while ensuring that the system remains viable for the seniors of tomorrow.

    The difference between the Gore and Bush proposals was probably best illustrated in a recent New York Times interview. When questioned on the merits of a FEHBP-styled Medicare reform plan, HCFA Administrator Nancy-Ann Min DeParle mocked the suggestion that seniors could adequately choose their coverage. “It’s difficult for seniors to navigate among plans,” Ms. DeParle explained in the interview, “Do seniors want and need all these choices?”

    The Bush plan answers Ms. DeParle with a resolute yes. The underlying philosophy is that if seniors are empowered to choose a plan that best suits their needs, including prescription drugs, competitive pressures and market dynamism will ensure high quality health care at the lowest possible prices. This has been demonstrated by the FEHBP and such an approach will accomplish the two goals of Medicare reform: financial sustainability and modern, personalized health care.

    Conversely, Ms. DeParle and Vice President Gore believe seniors should be forced into a one-size-fits all solution that distrusts seniors and ignores reality. To them, the hyper-centralized bureaucracy created in 1965, with its price controls and centralized planning, is a glimmering symbol of efficiency for the new millennium and deserves expansion.

    Both plans offer a similar promise of prescription drug coverage, but the differences in implementation reveal vast differences in philosophy, trust, and priorities.

     

    Full Study:

    Citizens for a Sound Economy
    Issue Analysis 110:
    Policy Prescriptions vs. Policy Palliatives in the Prescription Drug Debate
    (PDF format, 9 p. 136 Kb)