Congressional Corner from Representative Mike Pence: Universal Medicare Drug Plan is a Prescription for Disaster

Send this article to a friend.

Printer friendly version.

Congressional Corner from Representative Mike Pence: Universal Medicare Drug Plan is a Prescription for Disaster

By Representative Mike Pence (R-IN)

The following op-ed by Congressman Mike Pence appeared in The Indianapolis Star on June 26, 2003. It appears here in a shortened form with the Congressman’s permission. It is included with the Congressman’s permission. The views below do not necessarily reflect the views of TSCL.

As Congress considers the largest expansion of Medicare in 35 years, it should remember that Medicare has cost the American taxpayer more than seven times the projections since it was created in the 1960s. With an annual federal deficit of more than $400 billion, I will support the creation of a national prescription drug plan only if it’s fiscally responsible and includes free-market Medicare reform measures.

Only by significantly reforming Medicare along the lines President Bush originally intended can we afford to meet future obligations, including a prescription drug benefit. He called for comprehensive Medicare reform that would be based upon creating a system similar to the Federal Employees Health Benefits Program, which covers Members of Congress, federal workers, and retirees. The current FEHBP system offers a wide variety of benefit and plan choices, and all have prescription drug coverage integrated into competing plans. Private-sector insurance and consumer choice are two hallmarks of this system.

There are seniors near the poverty level who need immediate help with the cost of prescription drugs. Nearly 24% of them have no prescription drug coverage, and about 5% have out-of-pocket prescription costs of more than $4,000 per year. For these seniors, our national government should respond with a drug discount card or some form of means-tested direct subsidy.

Sadly, prescription drug plans currently being advanced in the House and Senate lack such focus and actually create a universal drug benefit that provides a government entitlement for every American over the age of 65. That population of some 37 million today will grow to 70 million by the year 2030. While the need for some type of benefit is real, the need for a universal benefit is not. At present, 76% of seniors have some form of prescription drug coverage, and the average senior spends less than $999 per year in out-of-pocket expenses on medications.

Adding a universal drug benefit to Medicare may have unintended, negative consequences. Namely, seniors with private coverage from a former employer may lose their coverage. While Medicaid and private Medigap plans play a large role in prescription coverage, one-third of seniors enjoy employer-based prescription benefits as part of their retirement plans. According to recent Congressional Budget Office estimates, 37% of all retirees with employer-based coverage would lose it under the Senate plan, 32% would lose it under the House plan.

The most ominous consequence of a universal drug benefit could be that it will usher in the beginning of socialized medicine in America. This type of system, which is built on unrealistic fiscal projections and incorrect assumptions about human behavior, would invariably lead to the kinds of escalating costs for which price controls and outright government management will be seen as the last resort.

Let’s reform Medicare so it will be there for the future without placing an undue burden on our children and grandchildren. And let’s otherwise “do no harm” to the private-sector foundation of the greatest health-care system in the history of the world.

By agreeing to a prescription benefit for all seniors, rather than those in need, Congress threatens our nation’s fiscal stability, the private prescription plans of millions of seniors and the survival of our free-market health-care system.

October 2003