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The New York Sun


Paging Dr. Greenspan

June 02, 2006

By David Gratzer

Maybe it's because Medicare Part D has made pharmaceuticals somewhat more affordable, but Washington Republicans sure seem to be exhibiting the classic symptoms of drug intoxication when talking about their Medicare "reform" — euphoria, poor judgment, and feelings of grandiosity. Certainly, Republicans are so high on Part D that they're failing at one of the most important jobs they should be doing right now. Real Medicare reform, not the Part D variety, is urgently needed. Republicans have already squandered one opportunity in a paroxysm of bad political judgment.They can't afford to squander another.

Which, unfortunately, is precisely what they're doing in the wave of back-patting that has followed passage of the prescription benefit. Immediately after the benefit was passed, the Washington Times happily proclaimed the benefit the start of a "permanent Republican majority." Republicans are claiming another "victory" now that enough seniors have signed up to spare the program from immediate actuarial collapse. "America's seniors and disabled citizens have voted with their written applications, telephone calls and mouse clicks: they want Medicare prescription drug benefits," Senate Majority leader Bill Frist declared recently. The Times thinks it sees happy political implications: "Opinion polls in support of the benefit are off the chart.And apparently Democratic strategists are telling candidates to cool their anti-benefit rhetoric."

We should be so lucky.The reality is quite different: Witness low overall Congressional approval ratings. Besides, judging the program based on its popularity among seniors seems, at best, narrow.True, millions signed up.True, too, many are satisfied, at least in these early days. But why wouldn't the program be popular and satisfactory? Congress committed more than $700 billion to the drug benefit over the next 10 years. Plan D, in other words, is a massive subsidy, and how unhappy can people be when they get $700 billion of new benefits lavished upon them?

Popularity shouldn't be confused with progress. Consider the biggest public policy achievement of the last three decades: welfare reform. Was the dismantling of the old Aid to Families with Dependent Children sparked by unease among recipients? It wasn't. Rather, politicians — in particular, Republicans — saw the program as costly and yet failing to produce the intended result. They proposed a re-thinking of welfare.

That type of leadership has been absent on Medicare. For years now, Washington has allowed politics to trump policy when it comes to the government health insurance plan. Plan D is a case in point. Hoping to win seniors votes, Republicans committed themselves to a massive new expansion at a time when Medicare is sinking into insolvency. Plan D has worsened a bad situation. According to the Medicare Trustees' recent report, the new drug benefit will cost future generations nearly twice the overall unfunded liability of social security.

What, then, for Medicare? The first step is to avoid the growing bipartisan demands for quick fixes like "negotiated" drug prices. Washington doesn't negotiate, it dictates. The end result of such efforts would be price controls on prescription drugs,much to the detriment of the pharmaceutical industry and everyone else interested in drug development, which is every American.

Second, the Bush White House should push forward with meaningful Medicare reforms. That would mean, among other things, looking away from all-encompassing coverage and considering some role for health savings accounts. The same round of "reform" that brought us Part D also managed to create HSAs, although not for the elderly, and lawmakers need to do more to encourage such accounts.

Third, everyone needs to ask tough questions. Should every senior be covered by the program, even the wealthiest of Americans? Should eligibility begin at 65, given that modern medicine has redefined old age?

Considering the bitter partisan environment in Washington today, it seems unlikely that any substantive conversation would start in the halls of Congress. Thus, President Bush should appoint a bipartisan commission to study the issue.

The problem is that bipartisan commissions often lack the gravitas to move a debate forward — witness the irrelevance of President Bush's commission on tax reform.The key is finding an individual capable of cobbling together a bipartisan consensus on a thorny issue. Who would that be? I suggest Alan Greenspan, the former chairman of the Federal Reserve, who successfully led the National Commission on Social Security in the early 1980s. Mr. Greenspan holds credibility in Washington and beyond, and, based on his recent statements, understands the urgency of the situation.

Plan D was born partly out of necessity because Medicare's original 1960s-era design couldn't keep up with modern medicine. It took almost 40 years for politicians in Washington to build consensus even for a bad idea like Part D. If there is any benefit from the new drug program, it is that Part D is so flawed that lawmakers won't be able to dally for another 40 years before revisiting the issue. Let's just hope they manage to heal the patient on their second attempt.

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