Politics & Policy

Send The Staff Home

An immediate treatment for Medicare reform.

In order to deal with the heat and humidity of Washington in August, presidents from Adams to Bush have come up with a simple strategy: Leave town. For House and Senate staff attempting to forge a compromise on Medicare legislation, there is no such relief in sight. Indeed, the negotiators must surely feel that they are trapped in some type of congressional summer school, stuck inside while everyone else is having fun. But Republicans will do more for Medicare by doing less — rather than eking out a difficult compromise, they should just go home.

The political rhetoric surrounding the Medicare bills passed this June is reminiscent of an old Akira Kurosawa film in which the same events are recalled very differently by a handful of participants. For entitlement-friendly Democrats, the legislation enhances benefits for seniors. Senator Kennedy (D., Mass.) went so far as to declare: “If you oppose privatization, you support this.…” For reform-minded Republicans, such as House Ways and Means Chairman Bill Thomas (R., Calif.), it’s a necessary step toward introducing choice and competition.

But unlike the odd distortions in a Kurosawa film, there’s a simple explanation for the different views: They’re talking about different bills. And herein lies the difficulty for House and Senate negotiators. The Senate bill effectively adds an expensive benefit to Medicare, with almost no change to the program. The House version outlines some reasonable changes, albeit modest in scope and not in the immediate future. Conference negotiators are thus left with the thorny task of attempting to bridge a gap as vast as, well, the ideological gulf between Ted Kennedy and Bill Thomas.

Such a gulf could be filled if President Bush would exert the sort of influence that President Clinton did with Speaker Gingrich during conference negotiations. When it comes to Medicare reform, however, President Bush has let it be known that he just wants an agreement. Envisioning a bipartisan bill signing, the White House has signaled it will be happy so long as the prescription-drug issue goes away.

But while the White House hopes Medicare will disappear as an issue, it’s not going to — regardless of what conference negotiators decide. “This is a system out of control,” explains Professor Thomas Saving of Texas A&M. He would know — Prof. Saving serves as a public trustee of the Medicare and Social Security Trust Funds. Under current law, Medicare will consume 20 percent of federal income-tax revenues by 2026, notes Prof. Saving. But a drug benefit will make the program even more costly, consuming about 24 percent of federal income-tax revenues by 2026. “The Medicare prescription-drug bill is terribly expensive when looked at from this perspective.” Medicare reform, then, ought not be about simply adding on a new, expensive prescription-drug benefit.

There is a way to square good politics with good policy. In the midterm elections, Republicans promised seniors a break on the cost of pharmaceuticals. Late last week, the GOP delivered: Conference negotiators agreed on discount cards that will reduce the drug bill of seniors, particularly those with lower incomes. It’s not a sweeping prescription-drug benefit — but it’s a relatively inexpensive add-on and, unlike a full benefit, will give seniors a price break in time for the election.

With further negotiations, the House and Senate designates could well hammer out a deal. Fiscal sanity, however, demands more than a deal for the sake of a deal. The House and Senate leadership should declare victory and send them home.

Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute.


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