Prescription For Disaster

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President Bush took a break from warning members of Congress about the budgetary shortfall that will befall Social Security to tell them to stop worrying about the funding gap for a new Medicare program. Maybe it’s just one of the president’s personal quirks, but it’s odd that when choosing which crisis to sound the alarms about, the president would pick the one further down the road. The Social Security shortfall is projected to hit in 2042; the Medicare one in just a few years.

Maybe it’s not all that strange. The Medicare crisis that Bush is shrugging off is one that his administration is largely responsible for. 

Pushed by the White House and the Republican majority, Congress in 2003 approved a major expansion of Medicare, which provides health insurance to elderly Americans, by offering a new benefit to help pay for prescription drugs. The vote was close, reflecting that a sizable number of people believed the benefit to be too expensive while an almost equally large group regarded it as inadequate.

One assurance that the administration offered that might have helped swing the vote was a pledge that the benefit would cost no more than $400 billion between 2004 and 2113. The new entitlement remained largely unfunded—to their discredit, many Democrats simply advocated a larger unfunded benefit—but the administration’s promise proved comforting for some.

It now has also proven hollow. New figures were released last week, and the administration now projects that the pharmaceutical benefit will cost in the neighborhood of $1.2 trillion. Administration officials have tried to explain away the significance of the new estimate by pointing out that it covers a slightly different 10-year period (2006 to 2015 rather than 2004 to 2013) and that there will be some countervailing savings in the Medicaid program. OK, but there’s no getting around the fact that the cost estimate has tripled.

Not that the administration’s credibility was strong to begin with. Soon after Bush signed the bill establishing the new benefit, the administration revised its original estimate of its 10-year cost from $400 billion to $534 billion. A few months later, Medicare’s chief actuary said that he had told administration officials that the program could cost as much as $600 billion, but that he had been threatened with dismissal if that figure was made public.

Last Friday, amid much consternation about the cost of the program from both Democratic and Republicans—including Sen. Judd Gregg of New Hampshire—Bush threatened to do something he has never done as president. No, not play it straight with budget numbers, but use his veto power to quash any “attempt to limit the choices of our seniors or to take away their prescription drug coverage under Medicare.” This being an administration in which the only budget option ever taken is to run up the deficit, the president apparently failed to consider the possibility of keeping the drug benefits but finding a way to pay for them.

Some legislators are urging another approach: Curb spending by holding down the cost of pharmaceuticals. That might be accomplished by giving the federal government the authority to negotiate discounted drug prices with manufacturers. Still others say that program costs should be moderated by re-examining benefits, perhaps making them less generous for higher-income seniors.

Just about anything would be preferable to the Bush approach—throwing around phony numbers and pretending that the real cost of the program doesn’t matter in the long run.

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