November 25, 2002
Expanding the Social Insurance State

The Wall Street Journal's Alan Murray believes that the biggest accomplishment of the next congress is going to be a substantial expansion of the social insurance state: - Political Capital: ...The Republicans who will lead Congress when it convenes in January already are touting a conservative agenda of tax cuts, abortion curbs and rollbacks in government spending. But privately, many acknowledge that the signal achievement of the 108th Congress may turn out to be something very different: the biggest expansion of government health benefits since the Great Society. They will do it because they have to. For the second election in a row, Republican candidates escaped unscathed from Democratic attacks on the prescription-drug front. But they escaped both times by saying they, too, are willing to throw hundreds of billions of tax dollars at a new program to provide prescription drugs for the elderly. Now, most Republican strategists agree, they have to deliver. Next election, they won't be able to blame Sen. Tom Daschle for blocking the effort.

The pharmaceuticals companies that helped bankroll the party's victory also realize continued stalemate is no longer in their interest. Sure, the deadlock helped them escape the threat of price controls that they fear will become inevitable if the government becomes the prime purchaser of drugs. But it also caused their public image to plummet to depths once occupied only by tobacco companies and pornographers. The savviest drug-company executives realize passing a prescription-drug benefit is the necessary first step in rehabilitating their image. The hope of Republican health-care experts is to use the drug benefit as a carrot to encourage some much-needed reforms in the Medicare program. But even so, the cost will overwhelm any savings on the Medicare front. The prescription-drug bill passed by the House this year carried a price tag of $310 billion over 10 years. That will be the starting point for negotiations, with a final bill likely totaling $400 billion or more...

Posted by DeLong at November 25, 2002 10:58 PM | Trackback

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Well, there you go. Several of us just beat a related topic to death on the "Why doesn't the administration have an economic policy" thread.

Some of us felt that a single payer socialized health care type system could not work in this country because any of the argued potential advantages of such a system would be wiped out by the forces of greed. That politicians would turn the system into a political football. Campaigns would be won or lost based on promises to include more and more coverage and the costs would spiral upwards without end.

And so it is.

Now - in light of budget deficits and long term tax cuts - who's going to pay for it all?

Posted by: E. Avedisian on November 26, 2002 10:06 AM
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