Take his proposal for prescription drugs. Even though two-thirds of those on Medicare already have prescription drug coverage, Clinton would create a new entitlement program for all elderly people. They would have to pay $1,288 a year to get up to $2,000 in benefits. The government would pay for half of the first $2,000 in prescription costs, but nothing — zero, nada, zilch — after that. All of which turns the notion of insurance on its head. People don’t need coverage for the first few hundred dollars or so of expenses.
The purpose of having insurance coverage is to take care of expenses that are unusual, extraordinary, and beyond the average individual’s ability to pay. But those are exactly the expenses Clinton’s proposal fails to cover. A beneficiary would get help for up to $2,000 worth of expenses. But after that, they’re completely on their own. If an elderly person gets hit with $5,000 or $10,000 or $20,000 worth of prescription drug expenses, Mr. Clinton’s plan offers no help at all. Even worse, by introducing a government prescription drug benefit, he’ll squeeze out the private sector plans that now cover two-thirds of senior citizens, plans that do cover the larger, catastrophic amounts.
Moreover, processing small claims of $10, $20, or $30 through an insurance mechanism is extremely wasteful. The administrative costs of processing those small claims are as much or more than the cost of the claims themselves. Providing coverage for small amounts of routine drug prescriptions effectively doubles the cost of the drug and wastes everybody’s time with paperwork requirements.
More broadly, Mr. Clinton has squandered an opportunity to simplify a Medicare program that is absolutely baroque in its complexity. Hardly anyone understands the difference between Part A and Part B Medicare, and now Clinton wants to add a separate Part D program. Each part would have its own funding mechanism, administration and rules for co-payments, participation and deductibles.
On top of all that, a beneficiary will still have to go out and buy a Medigap policy to fill in all the gaps in the government program. So, to get decent Medicare coverage, beneficiaries have to have:
- Part A (for hospital care, no premium because it’s funded through the payroll tax, $800 deductible);
- Part B (for physician care, premium equal to 25 percent of program costs, the rest paid by taxpayers, $100 deductible);
- Part D (for prescription drugs, premium of $288 for $1,000 worth of benefits, no deductible);
- Medigap (pieces of all the above, premium paid either by employer or by the beneficiary, 10 different plan options);
- A lot of cash to pay for all the out-of-pocket costs not covered by the insurance plans.
The Breaux Commission’s recommendations, while far from perfect, would diminish such complexity, not add to it. But the president refused even to consider their recommendations. He claimed to disagree with the commission about their estimates of future cost savings, but such excuses ring hollow. Given his druthers, Mr. Clinton invariably favors programs that increase government involvement in social programs, not diminish it. The pattern has been clear from the earliest days of the administration, and his approach varies only when it runs up against stiff opposition.
So now we’re being offered a pile of half-baked ideas cooked up behind closed doors by yet another secret Clinton health care task force. If Hillary weren’t busy campaigning in New York, I’d swear they’d followed her recipe.