With friends like Bill Clinton, Sen. John Breaux (D-La.) doesn't need enemies. For more than a year, an official commission chaired by Breaux has been looking for ways to move away from Medicare's baffling mix of funding streams, benefit structures, administration and patient cost-sharing. In its final report, the Breaux Commission proposed giving the private sector the opportunity to offer a variety of unified major medical plans. Mr. Clinton decided instead to back changes to Medicare that retain its Byzantine complexity while introducing more dependency, more taxes, fewer choices and very little help for those who really need it.
Take his proposal for prescription drugs. Even though two-thirds of thoseon Medicare already have prescription drug coverage, Clinton would create anew 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 forhalf of the first $2,000 in prescription costs, but nothing -- zero, nada,zilch -- after that. All of which turns the notion of insurance on itshead. People don't need coverage for the first few hundred dollars or so ofexpenses.
The purpose of having insurance coverage is to take care of expenses thatare unusual, extraordinary, and beyond the average individual's ability topay. 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 afterthat, 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 agovernment prescription drug benefit, he'll squeeze out the private sectorplans that now cover two-thirds of senior citizens, plans that do cover thelarger, catastrophic amounts.
Moreover, processing small claims of $10, $20, or $30 through an insurancemechanism is extremely wasteful. The administrative costs of processingthose small claims are as much or more than the cost of the claimsthemselves. Providing coverage for small amounts of routine drugprescriptions effectively doubles the cost of the drug and wasteseverybody's time with paperwork requirements.
More broadly, Mr. Clinton has squandered an opportunity to simplify aMedicare program that is absolutely baroque in its complexity. Hardlyanyone understands the difference between Part A and Part B Medicare, andnow Clinton wants to add a separate Part D program. Each part would haveits 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 aMedigap policy to fill in all the gaps in the government program. So, toget decent Medicare coverage, beneficiaries have to have:
- Part A (for hospital care, no premium because it's funded through thepayroll 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 ofbenefits, no deductible);
- Medigap (pieces of all the above, premium paid either by employer or bythe beneficiary, 10 different plan options);
- A lot of cash to pay for all the out-of-pocket costs not covered by theinsurance plans.
The Breaux Commission's recommendations, while far from perfect, woulddiminish such complexity, not add to it. But the president refused even toconsider their recommendations. He claimed to disagree with the commissionabout their estimates of future cost savings, but such excuses ring hollow.Given his druthers, Mr. Clinton invariably favors programs that increasegovernment involvement in social programs, not diminish it. The pattern hasbeen clear from the earliest days of the administration, and his approachvaries only when it runs up against stiff opposition.
So now we're being offered a pile of half-baked ideas cooked up behindclosed doors by yet another secret Clinton health care task force. IfHillary weren't busy campaigning in New York, I'd swear they'd followed herrecipe.