The New Medicare Program: A Prescription for Disaster

At a cost of $400 billion over 10 years, Congressional Republicans have agreed in Conference Committee—with the enthusiastic encouragement of a Republican President—to the greatest expansion of government in two generations. This new Medicare program can only result in what government supplied health care has always produced in the U.S. and elsewhere: fewer new drugs and a lot more government. Of course, after a few years in practice we all know the program will end up costing a lot more.

The stated reason for the plan is to provide Americans with medicines they could not otherwise afford. The Republicans don't ask why drugs are out of the reach of so many customers. Nor do they ask how those who cannot afford their own drugs will now be able to pay through new premiums for everyone else's drugs.

Higher costs will be the result of enacting these prescription drug plans, based on the established track record of government involvement with health care. Medicare, which cost $3 billion a year in 1967 costs $250 billion today and, according to the Congressional Budget Office, will cost $474 billion a year by 2012 without any new prescription benefits. The idea that government involvement will reduce the cost of the development of anything as complicated and high-tech as life-saving drugs is ludicrous: The government, as Americans well know, cannot even control the cost of postage.

Rather than reduce the cost of drugs, like all government medical plans the new program will just add more of the poison that created the disease. Rigid controls and the vast bureaucracies of Medicare and the FDA already add billions of dollars to the cost of drugs. This, not the market place, is responsible for the current high cost of drugs. New government programs and "benefits" will further explode drug costs and result in rationing, restrictions, regulations, less research, and fewer drugs. Adding yet more federal bureaucracy to administer another program will just layer on more expense.

Fewer new drugs will become available as a consequence of these plans. When the government is "surprised" after the escalation in drug costs that result from a plan that promises to pay all of the bills, it will inevitably proceed to price controls and other new restrictions on drug companies

How do these Republican advocates of less government and free markets justify this huge new program? The woefully inadequate fig leaf they provide is the introduction of competition to Medicare from private insurance companies. However such competition will be available temporarily in only six cities during a six year test period beginning seven years from now (2010). What a triumph for Capitalism! Yet Senator Edward Kennedy says it will destroy Medicare. Yea. Sure.

There is one minor feature of the bill that would help seniors pay for their prescriptions. It would allow Americans to contribute to tax free Health Savings Accounts in conjunction with the purchase of high deductible health insurance policies. But this single feature is not nearly enough to make the legislation palatable.

If the government really cares about the availability of medicine, it can start decreasing rather than increasing controls over the pharmaceutical industry. What the government really needs to expand is not government, but freedom: a free market that encourages drug companies to develop plenty of new drugs to compete with the old. Free markets—including such features as Health Savings Accounts—would provide patients and physicians with better drugs at a more reasonable cost than the heavy hand of government.

Americans concerned about the cost of their drugs and their own health need to reject this crude attempt to bribe them with their own money.

Cartoon by Cox and Forkum.