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Medicare Bill Does More Harm Than Good to the Patient

For Immediate Release. November 26, 2003 On Tuesday, November 25, 2003, the Senate approved the Medicare Prescription Drug Improvement and Modernization Act (H.R. 1) by a 54-44 vote.  This legislation has caused the largest expansion of the welfare state in 40 years.  It is the most sweeping change to Medicare since its inception in 1965, that includes for 40 million older and disabled Americans a new prescription drug benefit.  On Saturday, November 22, 2003, the House of Representatives approved the bill by a 210-193 vote.  President Bush has eagerly said he is ready to sign the measure into law.  

“The Medicare bill does not provide for costs containment or meaningful market reforms. Tragically, what it does is make the federal government the largest financier in the world of prescription drug purchases,“ said Dr. Joel P. Rutkowski, president of the American Voice Institute of Public Policy.  

He added, “There is no doubt that these actions taken by Washington have put this nation one step closer to imposing price controls on prescription drugs which would damage the pharmaceutical industry.  This would put American's health at risk because they will not be able to purchase state-of-the art medications to treat their ailments.”  

The reason for this is the cost.  The Congressional Budget Office (CBO) has estimated that over the 2004-2013 period this legislation would result in direct spending outlays totaling $395 billion.  Furthermore, in its second ten years, CBO Director Douglass Holtz-Eakin has told members of Congress that the entitlements cost could reach between $1.7 and $2 trillion.  In fiscal 2004 or 2005, the new Medicare bill costs only a few billion since it is not fully effective until 2006.  In fiscal year to September 2007, its net cost reaches $40 billion.  However, in fiscal year 2013, it rises rapidly to $65.5 billion as baby boomers retire.  At this point its cost will be increasing over 11 percent per annum, or as compared to the U.S. economy as a whole, six percent faster.   So to control cost as Medicare has done in the past with price controls for physician fees and hospital reimbursement, it will follow suite for prescription drugs.  

For a minor problem, Republicans – led by President Bush – have made a mountain out of a mole hill at the expense of every young worker by approving this Medicare entitlement program.  For example, prescription drugs already provide coverage for 76 percent of American seniors.  Only two percent of those 65 or older have minimal income and maximal drug expenses (greater than $4,000 annually) of those without coverage.   

What the Medicare bill will do is cause seniors who have prescription drug coverage through their former employer¾37 percent of those in Medicare¾to lose coverage.  For example, although the measure has $86 billion in subsidies and tax relief to encourage employers to retain coverage that is more comprehensive than the limited benefits available under the bill corporate economic pressure because of raising health care cost will cause many employers to no longer provide such benefits.  It has been estimated that two million to three million retirees with benefits could lose them indicate experts.  

Once again, the Republicans led by President George Bush have taken a page out of Dick Morris and President Clinton's strategy book – that of triangulation.  But as they continue to take another issue away from the Democrats, they can no longer call themselves the party of limited government but have transformed themselves into big government Democrats.  As they enact the largest expansion of the Welfare state in four decades to purchase votes for the 2004 election, they continue to harm younger taxpayers and future generations as they saddle them with more debt than they will be able to handle.  “To see the future of America that the Bush Administration has created by promoting the Medicare bill, one just has to look across the Atlantic to Europe,” said Dr. Rutkowski.  “In which Europeans promised their seniors far more welfare than the young will be able to likely support,” he said.

For Interviews Contact:

Joel P. Rutkowski, P.h.D.
President, The American Voice Institute Of Public Policy


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