News Release

November 18, 2003

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Cato Expert: Medicare Drug Benefit 'A Terrible Mistake'

WASHINGTON--Cato Director of Health and Welfare Studies Michael Tanner issued the following statement regarding the Medicare prescription drug plan under consideration by Congress:

The Medicare prescription drug bill to be voted on by Congress this week is a terrible mistake that will dearly cost our children and grandchildren.

This is not a Medicare reform bill. This is barely a Medicare prescription drug bill. This is a bill for politicians and special interests buying favor with the AARP. Consider:

Expense: This bill will clearly exceed the original $400 billion price tag. In a typically congressional version of compromise, the conference committee report incorporates the most expensive aspects of both the House and Senate bills. This is a program that already faces unfunded liabilities of more than $33 trillion. The conference report is the political equivalent of cramming more passengers on the Titanic.

No Reform: Any attempt to actually reform Medicare has been stripped out of this bill or so watered down as to be unrecognizable. Proposals to give seniors more choices and add elements of market-based competition to the program have been reduced to a tiny pilot project that doesn't even start until 2010. Even highly touted proposals for Health Savings Accounts have been weakened with restrictions and limitations that will severely limit the number of people who can take advantage of them.

No Cost Control: Attempts to cap the bill's cost have likewise been diluted. Instead of a hard cap, there is a vague call for future Congresses to consider changes if costs become too high.

Unnecessary: Despite promises of political campaigns past, a prescription drug benefit was never Medicare's most pressing need. Most seniors already have prescription drug coverage through their Medigap policies. More than 70 percent of Medicare beneficiaries spent less than $500 from their own pockets for prescriptions last year. A small, targeted prescription drug benefit aimed at the small number of low-income seniors with high drug costs might have made sense. But there is no need for the biggest new entitlement program since the Great Society.

Short-term political advantage is not worth the cost to future generations. Sometimes the better part of valor is recognizing when you have made a mistake. Congress should recognize that this bill is a mistake and go back to the drawing board.