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Press Release

    Memo to Congressional Leaders

    05/09/2002

    We can all read polls. Seniors want a prescription drug benefit as part of Medicare. And with Democrats planning to scare seniors with false and misleading attacks on Social Security, Republicans want to make sure they are on the “right side” of a core issue with seniors.

    But, polls aren’t everything. In fact, following the polls on a Medicare prescription drug benefit can get you into a deep political and policy bind. Republicans must keep in mind:

  • Democrats will always offer a more “generous” plan, and will always lie about what is in the Republican plan.
  • Medicare is in desperate need of fundamental reform – a prescription drug plan is the carrot to make it happen. If Congress passes prescription drugs legislation without reform, the job gets harder, not easier.
  • Nothing happens in a vacuum. This Congress has already spent too much money. In the wake of the farm bill, the supplemental, campaign finance, steel quotas, and mental health parity, an expensive prescription drug plan will further deflate the conservative base.

    Seniors have a legitimate gripe about Medicare. It is not a voluntary program, so if the government forces all senior citizens into Medicare, it should provide an adequate set of benefits. Lack of a prescription drug benefit is a symptom of what’s wrong with Medicare, not the cause of Medicare’s problems. Medicare remains a one-size-fits-all program designed in 1965.

    Medicare is starting to look more and more like the Canadian health care system. Since at least 1984 the primary focus of the government’s Medicare policy initiatives has been saving money. We are left with a complex system of price controls that has divided providers and forced congressional committees and Medicare regulators to “divine” appropriate prices and payment policies. And yet, because of demographics, medical technology, and market forces, costs continue to escalate.

    The entire Medicare system needs fundamental reform – you can’t fix one piece at a time. Adding a new benefit onto a broken system, and “paying” for it with another round of clamp downs on provider payments only makes the job of reform that much more complex. Price controls on drugs become more likely if the benefit is an add-on, rather than a component of comprehensive reform.

    Politically, the job just gets harder. Chairman Thomas will lose a major carrot he can use to force everyone to agree on comprehensive reform if prescription drug benefits are addressed without discussing fundamental Medicare reform.

    The dynamics of an election year drive for prescription drugs work against Republicans. Democrats care far more about regaining control of the House than they do about health care for senior citizens. They will endlessly up the ante and change their position to make Republicans look cheap when it comes to taking care of senior citizens.

    The danger is that in the pressure-cooker of an election cycle, will Chairman Thomas have the support he needs to defend his plan, or will the political end of the House and Senate GOP demand that he compromise and up the costs of the prescription plan?

    The more the costs go up, the more deflated the conservative base of the coalition will become. This Congress has already spent far in excess of what is acceptable. The Farm bill massively expanded subsidies. The supplemental is almost guaranteed to exceed the administration request by several billion dollars. The annual appropriations process is just getting started, but the signals suggest the spending increases will reach historic levels. Where is all this money coming from?

    When it comes to Medicare, there are no easy answers, either politically or from a policy perspective. But if Republican leaders are not careful, they will get the worst of all worlds --- little or no political credit with a poor policy outcome that makes good policy harder to achieve. The polls may not say that, but then again, polls aren’t everything.