NCPA - National Center for Policy Analysis

Subsidy For Prescription Drugs Termed Unwarranted

July 21, 2000

Vice President Al Gore proposes to have Medicare pay for senior citizens' prescription drugs at a cost of $255 billion for the first decade. He would have the federal government give Medicare beneficiaries up to $5,000 a year for the drugs -- and force pharmaceutical firms to offer them at deep discounts.

Aside from formidable ethical and economic nightmares lurking in that plan, studies show that nearly all seniors are able to satisfy their prescription drug bills.

  • Medicare beneficiaries spend an average of only 4 percent of their annual income on prescription drugs.
  • In 1999, about half of Medicare recipients spent less than $500 for drugs.
  • Some 45 percent spent between $500 and $3,000 -- and just 6 percent spent $3,000 or more.

As critics point out, surely some among that 6 percent were rich retirees, while most were in the middle-income range -- with only a minority having lower incomes.

Source: John J. DiIulio Jr., "A Handout for Everyone," Weekly Standard, July 24, 2000.


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