Comparing Prescription Drug Proposals: Bush v. Gore
Table of Contents
Drug Subsidies and Drug Costs
A recent study for the White House concluded that when people have insurance coverage for drugs, they get more drugs. "Average spending for people with coverage is consistently higher than for people without coverage across income groups."5 The difference between those with and without coverage is greater at the poverty level than for other income groups. But as Table II shows, there is no significant difference in the size of the spending gap between covered and noncovered among beneficiaries with incomes at any income level above poverty. This suggests that insurance coverage increases consumption of prescription drugs, irrespective of income.
"Seniors with insurance coverage for drugs buy more drugs."
Supporters of an expansive Medicare program argue that any prescription drug program should cover part of the cost for everyone in Medicare, regardless of income. As Table III shows, higher-income seniors make up a large percentage of the Medicare population spending the most on drugs. Under the Gore proposal, MediCoverage would offer discounts on prescriptions for everyone on Medicare because pharmacies would be required to sell them prescription drugs at the same discounted price given federal employees under the Federal Employees Pharmacy Benefit Plan. (The implications of this are discussed more fully below). If, as the White House study indicates, a universal benefit will result in greater drug spending by more affluent seniors, the resulting increase in the cost of providing the benefit inevitably will draw significant pressure to rein in costs. The techniques used likely will place restrictions on the supply of prescription drugs that will come at the expense of the poor and chronically ill.
