March 03, 2005, 11:32 a.m.
Lyposuction Needed
Republicans betray principle and propriety.

Rep. Jeff Flake (R., Ariz.) is one of Congress’s biggest waste watchers. He recently denounced a $150,000 federal grant to the Grammy Foundation. But this “No Rock Star Left Behind” program is a pork dumpling compared to Flake’s next target: a giant, bellowing sow called the Medicare prescription-drug benefit. Alas, President Bush is not amused.

This massive entitlement is a Republican deed fueled by Democratic words, namely: Medication is too expensive and should be cheap, if not free — even for rich seniors.

When Congress adopted this measure in November 2003, GOP leaders and the Bush administration promised a $395 billion, 10-year expenditure. By January 2004, however, the White House revised that to $534 billion, a two-month overage of 35.2 percent.

Last month, the administration pegged this boondoggle’s 2005-2015 cost at $724 billion, 83 percent above its original price tag — all before full benefits begin in 2006.

This fiasco has stunk since inception. To dragoon normally pro-market Republican congressmen into swallowing this bitter pill, House leaders nearly twisted their arms clean off. Then they stretched the 15-minute final vote to a record two hours and 53 minutes.

Suspicions loom over failed attempts to reverse former Rep. Nick Smith’s (R., Mich.) “No” vote in exchange for $100,000 to his son’s ultimately unsuccessful congressional campaign. Also, former Medicare administrator Tom Scully allegedly threatened to fire chief actuary Richard Foster if he honored congressional requests for his now-vindicated runway-cost forecasts.

This wholesale betrayal of principle and propriety is Washington Republicans’ darkest hour. This horror will persist, both in policy and politics.

Like air in a vault, tax dollars are finite. Cherished Republican valuables — personal retirement accounts, an expired “death tax,” permanent Bush tax cuts, critical national-security spending — all compete for oxygen against a swelling Medicare drug hog that pants with increasingly labored breaths. Unless revenues suddenly flow in — as if from a just-opened cooling duct — Republicans will have to pick either these vital economic reforms or a sweaty, voracious pet that will asphyxiate these free-market treasures.

Amazingly enough, reckless Republicans unwittingly timed this program to jeopardize their November 2006 electoral prospects.

Rather than simply help poor, uninsured seniors, Republicans designed a mind-boggling contraption that reimburses 75 percent of the first $2,000 in pharmaceutical outlays after a $250 deductible. Then payments stop until spending hits $5,100, whereupon 95 percent reimbursements commence. This gap is nicknamed “the doughnut hole.”

Some seniors, even those with private prescription coverage, will receive these benefits next January, then disappear into the doughnut hole before the midterm congressional elections. Their subsidies would not resume until 2007.

In a study released Thursday morning titled “Weird Science: Projecting the Effects of Medicare’s Odd Drug Benefit Design,” Heritage Foundation Visiting Research Fellow Edmund F. Haislmaier estimates the dates at which seniors with various levels of drug expenses enter the doughnut hole and exit it, if at all. Based on his calculations, at least 4,113,414 seniors will tumble down the doughnut hole and remain there on Election Day 2006. (For details see here.).

Haislmaier also reckons that another 2,394,664 enrollees will depart the doughnut hole by election eve (November 6, 2006), while 16,888,205 will receive relatively modest reimbursements and thus escape the doughnut hole altogether. How many seniors will vote Republican after enjoying GOP drug discounts that suddenly vanish until suddenly vanish at least until election eve?

“The problem for Congress,” Haislmaier writes, “is that it is axiomatic among health care policy analysts that those who benefit from health care changes rarely voice their appreciation while those who feel disadvantaged by the changes always complain loudly.”

Perhaps Rep. Flake and Senator Lindsey Graham (R., S.C.) will defuse this time bomb beneath the Republicans’ congressional majority. For now, they would cap the drug giveaway at $395 billion. Any year’s spending above the corresponding limit established in 2003 would trigger reductions to that level.

“When President Bush first proposed the new prescription drug benefit, it was targeted and means-tested for low-income seniors who did not currently have prescription drug coverage,” Flake stated. “President Bush’s plan also coupled the new benefit with some needed reforms of the Medicare program…By the time Congress was done with the package, it looked nothing like the President’s proposal. Congress expanded coverage to all seniors and yanked the reforms that would have helped curb future costs.”

Beyond Flake-Graham’s lyposuction, this benefit should become what it always should have been: concentrated relief for needy, insurance-deprived pensioners, not an all-encompassing blanket beneath which even wealthy seniors literally can enjoy Viagra subsidized by lovelorn, low-income workers. The Heritage Foundation’s Rea Hederman and I developed a focused plan that treats poor retirees more generously by letting prosperous elders help themselves. Learn more here.)

President Bush, still a veto virgin, threatens to nix decreases in the prescription benefit. He should stop the theatrics and cooperate with Jeff Flake and Lindsey Graham — unless he prefers to watch an immense pig smother the balance of his domestic agenda.

— Deroy Murdock is a New York-based columnist with the Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Fairfax, Virginia.