Scoring A Drug Fix

Dean Baker is economist and co-director of the  Center for Economic and Policy Research [1].

As we look at the national agenda for the new year, it’s useful to consider where we stood at the beginning of 2005. At that time, President George W. Bush was garnering his forces for a frontal assault on Social Security. With the Republicans controlling both houses of Congress, many of the pundits predicted Bush would win. They didn’t anticipate the sort of grassroots efforts that rose up to counter Bush’s campaign. Thanks to the hard work of tens of thousands of activists across the country, the Democrats in Congress held firm in supporting Social Security, and before long, many Republicans were running away from Bush’s plan.

This victory deserves to be properly celebrated—and then we must move forward. The defense of Social Security was an essential goal-line stand in support of the nation’s most important social program. But Social Security is a great success story that has benefited tens of millions of workers and their families. It never should have been on the chopping block in the first place. It was the strength of the conservative movement, and the weakness of progressives, that forced a fight over a program that we won 70 years ago.

Having won the battle on Social Security, we now have a great opportunity to start moving forward in the drive for a real Medicare prescription drug benefit. The prescription drug benefit passed by the Republicans in 2003 was a cruel joke, whose main purpose was to enhance the profits of the pharmaceutical and insurance industries. Seniors are now learning this the hard way when they go to sign up for benefits. They are presented with a dizzying array of choices, as they are forced to decide between plans that provide good coverage on some drugs but not others, or high co-payments and low deductibles or the reverse.

As has been widely reported, the plan is leading to anger and frustration. Seniors, many of whom have poor eyesight and are not accustomed to working with computers, have struggled to sift through the maze. In many cases they have relied on help from their children, who frequently have problems understanding the options themselves. Unfortunately, the complexity doesn’t help the government either. The bill for the benefit will still cost the government more than $900 billion over the next decade.

It didn’t have to be this way. The dirty secret in this story is that drugs are cheap. They only get expensive when the government gives drug companies patent monopolies that allow them to sell drugs without competition. They get more expensive when the government creates a convoluted benefit scheme in which seniors buy their drugs through private insurers. 

The logical way to design a prescription drug benefit is to have Medicare negotiate the price directly with the drug companies. This method has brought price reductions of 40 percent or more at the Veterans Administration and in other rich countries. These savings would allow seniors to have a simple low-cost prescription drug benefit. Rep. Jan Schakowsky, D-Ill., has proposed a bill [2]  that sets up a system along these lines.

In addition to creating a real drug benefit for seniors, the Schakowsky bill is an essential step in reaching universal health care coverage. Why? As the most efficient part of the nation’s health care system, expanding Medicare would be the most obvious way to reach universal coverage. However, no one would want to be in a Medicare system that doesn’t have a workable prescription drug benefit. For this reason, we must first reform the prescription drug benefit before we can expect the public to take “Medicare for All” [3]  seriously. If the forces that turned back the Republican assault on Social Security turn their attention to pushing for a real Medicare drug benefit, they will both be advancing the cause of providing more security for seniors and advancing the cause of universal health care.

The Campaign for America’s Future, the group that spearheaded the defense of Social Security, is already moving forward on this issue. If rest of the coalition that defended Social Security joins in, there is real hope of success.

The fact that 2006 is an election year improves these odds. Angry seniors struggling with a complex drug plan that provides limited protection will not be anxious to thank the Republicans on Election Day. And seniors always vote in disproportionate numbers in off-year elections. While this Congress may not reverse itself and approve a real Medicare prescription drug benefit, if the coalition that saved Social Security takes up this cause, it is likely that the next Congress will.