Medicare's Insolvent Entitlement

Two hours, fifty-one minutes, and $395 billion later, Congress had voted for the largest expansion of a federal program already facing looming insolvency. The bill, which, among many other things, adds a prescription drug benefit to the Medicare system, has no means testing to link the benefit to those who really need it. The elderly person who drives a limousine will receive the same benefit as the millionaire who steps out of it.

Retirees who already receive health benefits through their employers run high risks of being dumped. Despite an “incentive” structure of a tax-free 28% subsidy to encourage companies to continue providing such benefits to their retirees, the lure of a government program will be too great for most employers to resist in an age of under-funded obligations.

Congress added a prescription-drug benefit before to Medicare in 1988. But senior citizens forced lawmakers to repeal it a year later because retirees with prescription drug coverage from their former employers calculated that under the program, they would pay more in premiums and receive less coverage.

The $400-billion price tag of this proposed prescription drug benefit will, by many estimates, set the stage for a catastrophic fiscal crisis when baby boomers retire. And while the benefit may help some low-income enrollees who currently have no drug coverage, it could have a negative impact on the drug plans that many middle-class seniors currently enjoy. In short, providing a benefit for a small minority of seniors will jeopardize the policies many seniors already have.

Even worse, the bill contained a billion dollars for emergency hospital care for illegal aliens, and even for those who come into the United States using a 72-hour border crossing card. At a time when many hospitals are struggling to provide coverage for insured and uninsured citizens of this country, we are expanding benefits for those who are here illegally.

We didn’t offer seniors the flexibility and choice that members of Congress have the benefit of accessing through the Federal Employees Health Benefits Program (FEHBP). Instead, the bill contains six “experimental” choice programs beginning in the year 2010, little more than a symbolic gesture about the importance of expanding seniors’ choices, and the need to bring market reforms to an increasingly antiquated program.

Medicare has tens of thousands of pages of rules, policies, regulations and related forms. The prescription-drug entitlement, already a complicated mess, will just increase that figure. That means health-care providers will spend even more time on paperwork, not patient work, each day.

This bill has added a massive entitlement to an already financially insolvent, inefficient mess.

In the end, Congress squandered an historic opportunity to reform the Medicare program. We could have passed a prescription drug benefit for those near the poverty line, who truly are making choices between food and medicine. Instead, the benefit, for which the government can’t afford to pay, is the same for the rich and the poor alike, and most certainly will cost more than $400 billion.

A recent cartoon depicted an elderly person at a counter labeled “Medicare,” who was being asked how he would like to pay for his coverage. The man was handing his grandchild across the counter.

Some Members of Congress argued that they were doing this for their grandchildren. I voted no because I couldn’t do this to my grandchildren.