Congress is about to fix Medicare – a federal entitlement that is going broke – by adding another benefit. That’s tantamount to hitting the jackpot on a slot machine that just ran out of quarters.
As a taxpayer, who, one day, will become a Medicare subject, I have an uneasy, sinking feeling.
The Medicare Trustees have reported that Medicare spending will increase dramatically as the “Baby Boom” generation retires, and that this spending soon will outpace revenues traditionally used to pay for it. Under the current benefits package, Medicare spending is expected to double, relative to the size of the economy, over the next 20 to 25 years. It will double again by 2075.
Even without a new prescription-drug benefit, unless there are some dramatic changes made, Medicare will put an unsustainable burden on our children and grandchildren. In 20 years, if Medicare survives these soaring costs and a taxpayer revolt, you may not be able to recognize it. Even if you do, you may want to run the other way.
Better get your track shoes ready.
Today, when you compare Medicare with private insurance plans, it is more of sow’s ear than a silk purse. The Joint Economic Committee reports that, among leading forms of insurance, Medicare has the least generous benefits package.
A recent Congressional Research Service study found that Medicare is inflexible and its benefits have not significantly expanded to respond to new and innovative technologies and treatments. The CRS reports that between 1977 and 1999, Medicare increased the percentage of total health-care expenses it covered from 53.2 percent to only 56.0 percent. In contrast, private insurers expanded their share of total health-care expenses from 50.8 percent to 70.0 percent.
Currently, 78 percent of all seniors have some type of drug coverage. In fact, 37 percent of seniors have drug coverage under retirement plans offered by their former employers. Surely, they do not wish to give up this benefit!
However, the Congressional Budget Office estimates that, if Congress adds a prescription-drug benefit to the basic Medicare package, retired employees with this employer-based coverage likely will lose it. How can insurers compete by offering something the government is giving away? Therefore, the cost of prescription drugs for these seniors will be shifted from the private sector to the taxpayers.
As for these retirees, everything remains the same. They’ll still have their prescription-drug coverage. It doesn’t matter who is paying the bill, right? Wrong! The quality of prescription drug coverage varies greatly. Even if the maximum dollar amount of that drug coverage remains the same, the rub may be in the small print – if not today, certainly tomorrow. In fact, the bills under debate encourage the use of committees to create drug formularies (limited list of approved drugs) in order to ration (they don’t use that word) the medications available for Medicare patients.
Most seniors, who do not have prescription-drug coverage through retirement plans, have a limited amount of coverage through Medicare supplemental plans. However, 50 percent coverage with a maximum payout of $3,000 per year is the maximum amount of coverage available outside of HMOs. Why? The government dictates policy to the insurance companies who sell these Medigap policies.
The answer for these folks is to let the free market – not the government – dictate what plans are available. This will encourage innovation and competition which will give seniors more choices and drive down costs.
Yes, it’s true! Twenty-two percent of seniors have no prescription-drug coverage because they decided to pass up the opportunity to purchase it when it was available. They slept through the enrollment period, gambled that they would not need it or are truly indigent.
Surely, something can be done to give the people who can afford it a second chance to purchase this coverage through a private plan and to help the truly needy without locking everyone into a rigid one-size-fits-all, inefficient Medicare drug plan.
When that happens, the only way to control costs will be through rationing or price controls. This will cut down the incentives for drug companies to come up with new and better drugs, since Americans over 65 account for over half of all prescription drugs purchased in this country.
Does any of this sound familiar?
These were some of the major arguments used against socialized medicine /Hillary Care. Have we completely forgotten those lessons? What has happened to us over the last few years?
With Republicans – not Democrats – now in absolute control of this train, are we content to sleep in the back while they drive us off this cliff?
