The Economist tells us what it really thinks about George W. Bush's Medicare bill:
Posted by DeLong at November 30, 2003 05:28 PM | TrackBackEconomist.com | Medicare reform: ...The White House hopes the Medicare drug benefit will be as defining for Mr Bush's domestic agenda as Bill Clinton's adoption of welfare reform (long a conservative issue) was for his presidency.
The political logic in all this is hard to fault. But turkeys, no less than slimmer poultry, eventually come home to roost. The full economic disaster of this one will probably not be apparent until after next year's election, since most of it will not come into effect until 2006. But people may begin to do the numbers before then. Whenever they do, it could be painful. For this hotchpotch of compromises provides neither a sensible drug benefit nor any real reform of the Medicare programme.
From the old folks' perspective, the bill does not mean (as many believe) that Uncle Sam will now pick up the tab for all their prescriptions. The $400 billion that the bill promises is only a fraction of the amount that America's old will spend on drugs over the next decade. Besides, not all that money will go towards pill-buying. More than $100 billion will go on subsidies to employers, doctors and private providers of health plans.
Retired people will have to pay a premium of around $35 a month. The coverage will kick in only after grandma has spent $250, and even then there will be a 25% co-payment, up to a total drug cost of $2,250. Between $2,250 and $3,600 there is no coverage. Only after grandma's bills top $3,600 does the government step in again. This “doughnut� benefit (with a large hole in the middle) could well be enormously unpopular. Although poorer old people (whose premiums will be subsidised) and those with exorbitant drug bills will be better off, not everyone will.
In fact, some old people may be worse off, especially if their former employers use this Medicare expansion as an excuse to stop providing them with drug coverage. The Medicare bill envisages spending over $80 billion to bribe these firms not to do that. But the Congressional Budget Office (CBO) reckons that 2.7m retired people may lose their employer-provided drug coverage despite the subsidies...
Another case when Bush backloads his proposals. Another is, of course, his fiscal and tax policy. Another, I claim, is the PATRIOT act, many provisions of which haven't been used much yet. By the time people know what he did, he'll be in his second term, or out of office.
What a terrible collapse of the Democrats in Congress, the Republicans in Congress, the media, and as far as that goes, the electorate. Few of them know what we just did, with their help.
Posted by: Zizka on November 30, 2003 09:29 PMYou make a mistake in characterizing the bill. Seniors will NOT get full coverage after $3600 of DRUG COSTS. They will only get full coverage after $3600 of OUT OF POCKET COSTS. That doesnt happen until a lot later, given what they are counting as "out of pocket" costs (They seem to be excluding the monthly premium from that calculation).
This is truly a pretty lousy benefit.
Posted by: steve kyle on December 1, 2003 07:03 AMWhat collapse of Democrats in Congress?? The Dems held their own in the House forcing the GOP leadership to browbeat intransigents with threats to defund their election campaign, to blocking party advancement, running primary callengers, etc. It was not pretty. Those browbeat into voting yes will not be overjoyed at selling the policy.
Posted by: bakho on December 1, 2003 07:20 AMSeniors have already tabbed the bill as a scam, and are turning on AARP for abetting it. The effects on the polls depend on whether the close-to-retirement boomers have enough sense and chops to vote their interest rather than their predjudices.
Posted by: Dick Thompson on December 1, 2003 01:30 PMIsn't a stingy bill good? Most of the elderly aren't poor, so let 'em pay. Catastrophic coverage is good, as are subsidies for the poor. If the bill actually contains these provisions, boola-boola, but information on what the bill actually mandates remains thin on the ground.
Do we know if:
a) Benefits to the elderly poor are worse than they would have got under medicaid?
b) Private plans will be able to cherry pick, leading to a greater than expected government burden?
c) The catastrophic health coverage really covers *everything*?
Posted by: baa on December 2, 2003 08:57 PM