The Prescription Drug Plan That Is Eating Washington

Helping more seniors afford prescription drugs is a worthwhile national goal. But is it the only worthwhile goal?

Senate Democrats this week are pushing for a vote on a proposal that elevates prescription drugs for seniors over all other domestic needs. The plan is so expensive that if it ever passed, it could squeeze out the party’s other priorities--such as education or health coverage for the uninsured--for years. Compounding the problem, the Senate Democrats haven’t identified how they would pay for this big new expense because they are still unwilling to challenge President Bush’s huge tax cut. More spending on the elderly, and less revenue because of the tax cut--at a time when the war on terrorism is already straining the federal budget--is a recipe for big new deficits or for a debilitating shortfall in other domestic programs. Or most likely, both.

The Democratic prescription drug bill on the Senate floor is the culmination of a political bidding war that began in 2000. In that year’s budget, President Clinton proposed to update Medicare by adding a prescription drug benefit. Virtually everyone in both parties now agrees that’s a reasonable goal given the growing importance of drugs in health care. The question is how many seniors can Washington afford to help, and how much can it afford to help them--especially when the number of elderly Americans will soar over the next decade as baby boomers start to retire.

Conscious of that approaching gray wave, and of the demand of competing priorities, Clinton kept his ambitions realistic. In return for a monthly premium (which would start at $24 and roughly double over a decade), he said Washington would pay half the cost of prescription drugs for seniors until each side spent $2,500 a year; after that, the small percentage of seniors with greater drug costs would be on their own. Deeper subsidies would be available for the lowest-income seniors.

Al Gore first raised the ante in his 2000 campaign. He kept the basic Clinton structure but added a “catastrophic” benefit, insisting that Washington pick up all the cost for drugs after any senior had spent $4,000 a year. At times, Gore touted his prescription drug plan so heavily that he sometimes seemed to be running for president of a Century Village. But in the end, the bet came up empty: Gore carried seniors by only four percentage points in 2000, a margin no greater than Clinton’s in 1996.

From that performance, Democrats might have concluded that prescription drugs weren’t as potent a vote magnet as they believed. Instead, one party policy expert notes, they decided they “had to sweeten the benefit” to win over more seniors. Thus the bill from Democratic Sens. Bob Graham of Florida, Edward M. Kennedy of Massachusetts and Zell Miller of Georgia that would shift much more of the overall drug cost to government than would Clinton (or Gore): $500 billion over the next seven years.

That’s daunting enough when Washington is already looking at big deficits in its operating budget. But the near-term cost of all the prescription drug plans is only the tip of the iceberg. As the baby boom retires, the number of seniors will explode from 40 million to 70 million just from 2010 to 2030. Kenneth E. Thorpe, a former Clinton health official, projects that any prescription drug plan will cost nearly three times as much in its second decade as its first.

Keep in mind that even without a new prescription benefit, the baby boom’s retirement will force enormous increases in federal spending on the elderly. And Washington will be confronting these higher costs even as its revenue is shrinking under the full effect of Bush’s tax cut, whose costs also mushroom in its second decade.

By ignoring these big facts, Congress is producing a fantasyland debate. Neither the Senate Democrats--nor the House Republicans, who passed a more modest plan earlier this year--will acknowledge the obvious: Unless they retrench the tax cut, it will be virtually impossible to fulfill the promises they are making to seniors without raiding Social Security or increasing the national debt.

The debate is also obscuring a second trade-off--one most pertinent to Democrats as the party more committed to an activist federal government. Do Democrats really want to devote so much of the federal government’s limited wallet to this one problem? Expanding access to preschool, rebuilding crumbling schools and providing health insurance for some of the roughly 40 million Americans without it--should subsidizing prescription drugs for seniors crowd out those other needs?

Many seniors unquestionably need help in buying drugs. But two-thirds of seniors now pay less than $1,000 from their own pockets for prescription drugs; just 9% face costs of $3,000 or more annually. And the percentage of seniors in poverty (10%) is still much smaller than the share of children (16%). Yet no one is talking about throwing half a trillion dollars at kids.

That doesn’t mean Washington should ignore seniors in need. But it does mean the government needs to emphasize cost-containment in any plan it writes and target the aid precisely at those who need it most, something the Democratic plan refuses to do by rejecting greater cost-sharing for more affluent seniors. It also means that the final plan, like the original Clinton proposal, shouldn’t be so generous that it precludes spending on other problems.

Washington won’t need to resolve these trade-offs any time soon. It will be difficult for the Democratic plan to attract the 60 votes it needs to overcome parliamentary objections in the Senate. And even if it does, the Senate and House are unlikely to bridge their differences on how to structure the benefit this year.

That’s probably for the best. Congress and the White House need more time to consider whether the nation can afford such an expensive promise when the number of seniors around to collect on it will soon grow so rapidly. Dan Crippen, the outgoing director of the Congressional Budget Office, brilliantly crystallized the question that ought to guide this debate when he recently told the National Journal: “Even if we can afford--and we probably can--a drug benefit for our parents, the question is: Can our kids afford it for us?”

Ronald Brownstein’s column appears every Monday. See current and past Brownstein columns on The Times’ Web site at: www.latimes.com/brownstein.