NCPA - National Center for Policy Analysis

Clinton's Drug Plan Numbers Don't Add Up

July 9, 1999

The President wants to add prescription drugs to the list of Medicare benefits -- and he claims he can do so by charging seniors between $10 and $25 a month. He even predicts that adding that benefit would reduce overall Medicare spending.

Health insurance actuaries and other experts disagree.

  • According to the Bureau of Labor Statistics, seniors spent an average of $53 per month for drugs in 1997 -- far more than what the government plans to charge.
  • If seniors were allowed to join the program voluntarily and whenever they want to, then it would attract mainly those with high drug bills and those currently sick and whose bills have jumped up -- obviously, by more than $25 per month.
  • Moreover, if the President creates a prescription drug entitlement, seniors will be spending a lot more on drugs and the cost of the program will explode within a few years.
  • When spending got out-of-hand, the political temptation would be great to slap price controls on drugs.

Evidence indicates there isn't a drug crisis, since 65 percent of seniors already have drug coverage and others look to their HMOs and Medicaid for help.

Analysts suggest there far better ways to attack whatever problem there may be. Fixing the problem with HMO reimbursement rates would be a good start. Laws regulating supplemental Medicare policies might be adjusted to give insurers more freedom to add a drug benefit in exchange for, say, larger co-payments. Also, the states might consider helping low-income seniors and the disabled.

Source: Merrill Matthews Jr. (National Center for Policy Analysis), "No Remedy for Seniors," Washington Times, July 9, 1999.


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