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Produce Honest Drug Plan

June 12, 2003

The White House, the Senate and the House are all struggling to produce what President Bush promised in his 2000 campaign, a prescription drug benefit for Medicare. With the economy stagnant and new tax cuts taking ever larger chunks out of federal revenue, it's a job that, unfortunately, is likely to be done with smoke and mirrors.

Bush has proposed a drug benefit that would encourage Medicare beneficiaries to join private managed-care plans and receive more benefits than those who remain in traditional Medicare. His assumption is that up to 40% of seniors will switch, but independent estimates peg the shift at 2% to 3%. Too many people remember the managed-care debacle of the last decade, when HMOs jumped into the Medicare Plus Choice program and then fled the market, stranding seniors who depended on them.

Bush's and other proposals wouldn't go into effect until 2006, which would hold off their whammy on the struggling economy until well after the 2004 presidential election. The plans technically look more affordable in 2006, when a number of new tax cuts, including part of the federal child deduction, are scheduled to be phased out. The trickery is that no one thinks the phaseouts will actually happen.

Any drug plan passed now should begin now and be paid for now. Far better to hold off expanded tax cuts than to pass a drug plan and then put it on ice for three years. That concept may not be on the administration's radar but it's common sense.

Another glaringly unconsidered point in the GOP plans is drug prices. Medicare bargains with drug companies and gets across-the-board reductions for drugs administered in doctors' offices and hospitals, which the plan already covers. Any wider drug benefit should use the same mechanism, not leave it to the crazy quilt of the market, which failed to contain costs for nondrug medical care when HMOs got into the Medicare business.

Sens. Charles E. Grassley (R-Iowa), who heads the Senate Finance Committee, and Max Baucus (D-Mont.), the minority leader, are backing a simpler plan that would give all Medicare seniors a drug benefit with a $275 deductible and a $35 monthly premium. It is attracting some Democratic support. Health and Human Services Secretary Tommy G. Thompson has been vague, neither endorsing nor rejecting the Senate proposal. He should put the administration behind the plan, which would cost a little less than $400 billion over 10 years.

Reps. Charles B. Rangel (D-N.Y.), John D. Dingell (D-Mich.) and Pete Stark (D-Hayward) have a bill that costs $800 billion to $900 billion with no managed-care options. They argue that nothing cheaper will work, and that the deficits are not the Democrats' fault. It's easy to indulge in such finger-pointing, but Democrats should spend their energy improving what's likely to pass. An imperfect plan may be what it takes to start containing drug costs for seniors struggling to pay their bills. It is not imperfection but dishonesty that will be resented later.

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