NCPA - National Center for Policy Analysis


December 21, 2004

The passage of the $521 billion drug benefit program has drastically worsened America's ability to pay for senior entitlements, writes Robert Samuelson of the Washington Post.

Samuelson says the United States is making promises to seniors that it simply can't meet and politicians are too timid to do anything about it. Even before the drug bill was passed, the costs of senior entitlements have been piling up:

  • Social Security, Medicare and Medicaid were projected to grow by about 80 percent as a share of national income by 2030:
  • Medicare spending is expected to grow from 2.6 percent of national income in 2003 to about 5 percent in 2030.

Ostensibly, the drug benefit program is to help seniors pay for their medication, but there's little evidence that Medicare recipients can't get the drugs they need:

  • Three-quarters of Americans older than 65 already have some insurance for drugs.
  • About 10 percent of all seniors have no drug costs at all; an additional 29 percent have annual costs of less than $1,000, while 28 percent have costs over $3,000 ? the figures representing total costs, including what insurance pays.
  • In 2000, out-of-pocket expenditures averaged $623 for those older than 65.

Samuelson warns that Americans are living in a "self-created culture of delusion" that has foisted the costs of today's lavish lifestyle onto younger taxpayers. The longer reform is delayed, the more painful the solutions -- massive tax increases or dramatic cuts in government programs -- will be.

Source: Robert Samuelson, "Who Will Say No?" Washington Post, December 15, 2004.

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