Competing Drug Plans Won't Stop the Pain

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Mark Weisbrot
Houston Chronicle, October 11, 2000
Knight-Ridder/Tribune Media Services, October 5, 2000
Sacramento Bee
, October 15, 2000

George W. Bush looked like he had heartburn every time Al Gore brought it up in the presidential debate. "Ninety-five percent of all seniors would get no help whatsoever under my opponent's plan for the first four or five years," said Gore. Bush really couldn't respond, because it was true.

If you can't understand what Mr. Bush plans to do about prescription drugs for senior citizens, it's not your fault. No one can tell for sure what the co-payments, deductibles, or value of the package would be to most seniors. Indeed, it is not even clear that private insurance companies or HMOs, who are expected to provide the prescription drug benefit in the Bush plan, would be willing to do so.

Mr. Gore's plan is more straightforward, but has its own flaws. It would pay half the cost of prescription drugs up to $2000 beginning in 2002, rising to $5000 (with Medicare paying $2500) in 2008. Premiums would be $300 a year, rising to $600, with subsidies for both premiums and co-payments for the poor. It would also pay for all drug costs once a senior citizen spends $4000 for the year.

The problem with the Gore plan is not that it costs too much-- a nation facing a $4.6 trillion federal budget surplus over the next decade can certainly afford to spend seven percent of this money to provide a benefit that senior citizens need and deserve. It's just that they deserve a lot more.

The Gore campaign gives an example of an elderly widow with an annual prescription drug bill of $7,320. Under his plan, she would end up paying $4000 and Medicare would pick up $3,320.

This $4,000 could still be a very high burden. The majority of widows over 65 have annual incomes of less than $12,000. Although the poorest would be eligible for subsidies, many others would not. A lot of people would still find themselves, as the political campaign ads are now saying, choosing between food and medicine.

Worse still, the proposed benefit will be rapidly eroded by rising drug prices. And even at the outset, this coverage is much worse than that what most working people have now. Most people see this as unfair, and for good reason. The purpose of Medicare is to provide health insurance for people when they are retired (or disabled). This is exactly the time when you really need full coverage, because your health care costs have risen, and your income is reduced.

In a race where both major party candidates are awash in special interest money, much has been made of the philosophical differences between the candidates, especially on this issue. There is certainly some truth to this: the Gore plan builds, however inadequately, on the concept of universal social insurance embodied in Medicare. Social insurance means that everyone pitches in when they are young, healthy and working; and everyone is entitled to benefits, regardless of income, when they are not.

By contrast, the Bush plan creates a welfare benefit for the elderly poor-- which would make it much more vulnerable to future attacks-- and attempts to privatize the insurance provided to the rest of the elderly population. This would certainly be a step backward.

But philosophy won't pay the bill at the pharmacy, and neither will the Gore plan. The problem is that until now prescription drug policy has been subject to the veto of the pharmaceutical companies, which do not want the federal government to use its buying power to lower prices. Mr. Gore admitted this during the debate.

Of course there is one candidate in the race who is proposing a much simpler, comprehensive solution to the problem of prescription drugs. It borrows from the experience of other high- income countries, who spend just over half of what we do per person on health care, and cover all of their citizens. This solution-- universal national health insurance-- is also the one favored by most Americans when they are polled about it.

That candidate is Ralph Nader, and not surprisingly he is also not on the take from the insurance or pharmaceutical companies. But Nader has been excluded from the debates, despite the fact that he is on the ballot in 44 states (including Washington, DC). And the press has largely avoided reporting on his candidacy, even though they frequently report on candidates with similar or even lower standing in the polls-- for example, during the Republican and Democratic primary elections.

A limited, truncated form of democracy produces a narrow set of choices for the electorate, and often self-defeating reforms. This year's premier political issue, prescription drug coverage for the elderly, is a prime illustration of this problem.


Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He is also president of Just Foreign Policy