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When it comes to courting the growing senior vote, nothing is ever enough. Premiums, co-payments, and deductibles must be pushed ever lower. Prescription-drug expenses are a problem for some seniors, but of course the subsidy proposals are not limited only to those in need. The administration initially wanted to combine its new drug benefit with a reform of Medicare that would help pay for it. House Republicans, however, concluded that voters were very interested in the benefits and not much interested in reform. They are behind in the bidding, but no doubt will catch up with time. To the extent the government pays for prescription drugs, demand for those drugs will increase, as will the cost of the program. We know, from the experience of Medicare, how the federal government will react: by imposing price controls. Which will in turn slow down, if not halt, the medical innovation that a relatively free pharmaceutical industry has provided (and which made drug benefits so attractive in the first place). If political pressure necessitates a federal plan to cover drug benefits for the elderly, a rational one is on offer — developed by Grace-Marie Turner of the Galen Institute and Joseph Antos of the American Enterprise Institute. Their proposed drug plan would be integrated with other insurance policies, so that there is no incentive for the drug insurers to urge surgery on a patient while his other insurers urge drug therapy. It would not be so generous that it caused people to drop their other coverage to get it. Most important, it would require recipients to have some contact with economic reality. The typical senior who lacks drug coverage pays less than $600 a year for medicine. The government could give him $600 upfront and allow him to keep what he does not spend, thus preserving an incentive to save. It could provide him with insurance for expenses above that amount, charging realistic premiums, deductibles, and co-payments (with allowances for poverty). But realism is not the order of the day. The prevailing pretense is that benefits can be had for nothing and that no one need ever make trade-offs. Until that changes, debate over prescription-drug benefits is strictly for fantasists.
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current bidding war in Washington over prescription-drug benefits for
seniors illustrates what's wrong with our health-care system, and our
politics. Americans pay for their health care mostly indirectly, through
lost wages and higher taxes. They have no incentive to control costs,
which therefore balloon. When the government is picking up the tab, as
in the drug-benefit debate, economic reality is left even further behind.
Earlier this year, President Bush proposed that $77 billion be spent on
these benefits over the next ten years. House Democrats have upped the
ante for the same period to — $1 trillion. 
