A Misuse of the Next Dollar

President Clinton this week attacked the pharmaceutical industry for charging prices beyond the means of the elderly. Both political parties have election year proposals to give prescription drugs to the elderly. I understand the politics of this but not the policy. Let me make a compassionate and caring case against this proposal, which also will illustrate a new way of thinking about government programs for health care.

There is always unmet medical need in a state or union. Governors inevitably “ration” medicine. No state can give all the needed health care to all citizens within its jurisdiction. Government must inevitably decide whom to cover and for what benefits. Given the fact that the U.S. has 44 million citizens without any health care coverage and another 30 million significantly underinsured, should we be enriching the benefits of the one group already insured with federal money? Wouldn’t it be better to next cover those citizens without any health coverage?

Public policy is a world of multiple unmet needs. The question is not whether this new benefit is “needed” by Medicare recipients or would be “beneficial” to the elderly’s health, but a question of priorities. Whose claim in a world of needs is most deserving for the next fungible taxpayer dollar? The question is not what social programs do we as a nation “need”; there is much unmet need. The question is what do we need next?

Imagine that Congress is faced with an auditorium filled with 270 people. Of those people, 44 don’t have any health insurance and 40 more are significantly underinsured. Thirty-eight of those present, the oldest but also those with the most assets and disposable income, have a fairly comprehensive health insurance policy that covers them for “fee for service” medicine. President Clinton proposes that the United States’ next health priority is to tax the remaining 186 people in the auditorium, most of whom are insured but in “managed care,” to provide prescription drugs for all the elderly who already have, as a group, the best health insurance coverage.

Social Security, Medicare and Medicaid are perhaps the best anti-poverty programs ever passed, and they still keep up to half of our elderly out of poverty. Yet today we are living much longer, have significantly fewer children, and Medicare is projected to go broke in eight years. It is not wise to create a new entitlement on the basis of projections. However, if we do so, the next national priority ought to be to cover citizens without any health coverage.

There is another argument. As a demographic group, the elderly are not a monolith. True, the poorest people in the United States are “elderly widows,” but the richest people are also “elderly widows.” Do we really need to subsidize both categories from the pockets of working Americans? In 1995, $170 billion of federal entitlements were paid to people over 65 who had other retirement income of more than $60,000 a year.

The average person who receives a Social Security check today has more assets than the average person who pays Social Security taxes. Certainly we can find a way to subsidize those who can’t afford prescription drugs without also subsidizing--through the payroll taxes of working Americans--those who already are covered for drugs or can well afford them on their own.

The New Deal’s social insurance and LBJ’s Great Society programs were so needed and so right for the problems facing the United States in the 1930s and the 1960s that their influence still mesmerizes much of the public. Yet these programs have become “demographically obsolete” in a world where we live longer and have fewer kids. They are creating large demands on working Americans, many of whom have no health care at all and most of whom have more restricted health plans.

It is not social justice but election year politics that drives the president’s proposal. A compassionate nation looking at the total moral universe could and should do better.