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The Verdict is in on Medicare

If you remember how obsessed I was with the Medicare bill last fall (back when no one read this blog, and most people who looked at it ran away because all I ever seemed to write about was M-E-D-I-C-A-R-E over and over again), guess how much I am enjoying the latest events? Answer: a lot. Not only did Tom Scully of CMS (the sub-agency that oversees Medicare and Medicaid) threaten to fire his agency's actuary, whose independence had been written into law by a Republican Congress, if he revealed the real cost of the bill, it now turns out that Doug Badger of the White House -- the purest of hacks -- may have pressured Scully as well.

Conning the American taxpayers out of almost $150 billion -- that has to be a big deal. Working in the federal government, or in a foundation, one becomes a little inured to big numbers, but not numbers this big. This is $555 per man, woman and child in the United States! Will someone ask a Republican member of Congress if there is a definition of "high crimes and misdemeanors" that includes oral sex, but not grand larceny?

The challenge now is to milk this thing. It's not enough for the Medicare bill to be proven a bad deal. That's been done. It has to become the defining example of Bush domestic policy, the kind of thing that will be associated with his name and his party for decades, the way "forced busing" was associated with Democrats for decades after the last bus ran. It should be more than just an issue that influences the election. It should be so decisively rejected that it puts an end to this kind of "Mayberry Machiavelli" policy-making forever, and thoroughly discredits everyone associated with it. I want the backlash to be an insurance policy, so that even if Bush is reelected, the next time around the sane members of Congress, of all ideologies, have the backbone to say, "you're not taking us down that road again."

The problem is, liberal mistakes seem to stick to liberals and conservatives manage to shrug off their mistakes. I think it's because we have a template in our heads for understanding liberal overstretch: liberals are utopian, technocratic, they believe government can do more than it can, they don't respect the role of culture and markets. It's the Great Society story, and it had plenty of truth to it -- back then. It's the story told at the local level in City, Douglas Rae's recent book about New Haven, CT, cited my sidebar. But right-wing big government overreach just doesn't fit a familiar story. We don't have a place for it in our heads. There isn't a classic example that shows the recklessness, the disrespect for the public interest, the rejection of all values other than short-term political advantage, etc. The Medicare bill can be that story.

When I first went to work on Capitol Hill, in 1990, I encountered a lot of people who were still shell-shocked by the passage and then repeal of catastrophic care insurance a year earlier. Catastrophic had been seen as the next step in the slow progression of the economic and health security package for seniors, the piece that should always have been part of Medicare but never was. But when well-off seniors found out they would have to pay for it, and there was no real effort on the part of Congress to sell the bill (one lesson that this crowd seems to have learned.) You could trace much of the politics of the 1990s -- the backlash against Clinton, the over-cautiousness with which Congressional Democrats handled the 1993 health care plan and lost the initiative, and the 1994 Republican takeover -- back to the Catastrophic debacle, and many people who were there at the time do.

The issue can't just be the cost. Cost is an abstraction. To keep this story going, we need to open up two more fronts: First, did members of Congress understand that the premium for the prescription drug benefit was not really $35 as advertised, but some amount that is estimated as likely to average $35. Only after the bill passed did the director of the Congressional Budget Office say publicly that the $35 was an estimate based on many "moving pieces in the formula." (Another way to put it is that the private-sector providers are going to be able to charge what they want to charge, within some loose parameters.) How much is this really going to cost seniors? What does Richard Foster think it's going to cost them? Did members of Congress know this?

Second, where is all the money going? I can only do the roughest back-of-the-envelope math here, but according to the numbers I can find, there will be about 43 million Medicare recipients in 2006. At $550 billion, that's about $12,800 per Medicare recipient, over the seven years covered by the bill. (It's a ten-year cost estimate, but the benefit doesn't kick in until year three.) Many are not going to take the benefit at all, because they have other prescription coverage. Of the rest, 80% spend less than $5,000 on prescription drugs; by law, they won't get more than $1500 worth of benefits in any year. More than half will get much less than that. Here's a graphic that attempts, in an Ed Tufte-approved but imperfect way, to show exactly how this benefit works:

So, if 75% of the recipients participate, the cost to the public, or the addition to the debt, is about $2200 per recipient per year, over the seven years of benefits. But the vast majority won't be able to get more than $1500 even if they have very high drug costs, and those with average drug costs will get only about $750. There's inflation and population growth, and all that, but the question should still be, where's the money going? Drug companies, insurance companies, and the bribes to employers to maintain coverage is the answer. But we've got to keep it simple. It's a bad deal all around, and an example of why we can't afford four more weeks of this kind of government.

Posted by Mark Schmitt on March 19, 2004 | Permalink

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Comments

No one read this blog?! Bad on them. Still, where's the one-line bio touting your impressive interweb connections and elevated status among bloggers?

Posted by: ARON | Mar 20, 2004 4:44:03 PM

Sure we have a paradigm for Republican over-reaching - it's called Watergate; cf Iran-contra. The elements of a Republican scandal include a) contempt for congress; b) executive secrecy; c) financial benefit to someone in the incumbent's base.

The Medicare scandal is garden variety Republican scandal. Democrats should describe it as such.

Posted by: Pudentilla | Mar 21, 2004 7:49:30 AM

Let alone four more years!

Posted by: Regime Change USA - Anti-Bush T-Shirts and more | Mar 21, 2004 12:07:21 PM

Just found your blog recently with a link from
Angry Bear. Try to get over her when I have time.

This great stuff should go to Kerry. Or Move.On. The picture is good enough for most people to figure out.


So many great blogs. So little time.

Posted by: JWC | Mar 21, 2004 6:29:55 PM

...it now turns out that Doug Badger of the White House -- the purest of hacks -- may have pressured Scully as well.

Could the man have a more fitting last name than "Badger"? By the way, since the word has gotten a bit dusty with overuse, it's worth noting that a badger is a truly vicious animal.

Posted by: AlanF | Mar 21, 2004 8:57:37 PM

But we've got to keep it simple.

And, no offense intended, charts are not that.

MoveOn effectively hammered on this issue about a month ago (part of fighting the taxpayer-funded TV ads touting the benefits). They simply cited the Consumers Union study that showed the majority of Medicare recipients wouldn't benefit.

Haven't looked for that study; it's quite possible that it uses the same calculations as your back of the envelope estimates. (And may have its own chart...)

Posted by: eb | Mar 21, 2004 10:21:31 PM

"Will someone ask a Republican member of Congress if there is a definition of "high crimes and misdemeanors" that includes oral sex, but not grand larceny?" may be the rhetorical question of the year.

Seniors and all of us who are getting older by the moment need to rise up and challenge not only Bush, but also the members of Congress who participated in the scam....including alleged Democrats such as Ron Wyden.

Posted by: Chuck | Mar 21, 2004 11:20:40 PM

You're wrong. Totally. What kind of national health system will we get through the present Congress? It would be a stretch. But we can build momentum fo rone by encouraging Bush to pass things that create a demand for REAL reform. This is only the first. He should be praised for it, and encouraged to EXPAND it.

I simply do not understand why you don't accept a process that leads to progress toward a goal, instead of trumpeting to all and sundry that they should never allow changes to Medicare.

Posted by: Arnold Williams | Mar 22, 2004 1:31:44 PM

Liberals suffer from ADD. When the Bushies and Reaganauts and Nixonites are in power there's a scandal a minute, so ya just can't get consensus on what to highlight.

The failure to find WMDs is already known. So the Dems should go after the 5 biggest ones:

1) Valerie Plame (demographic: everyone)

2) The Medicare fiascoes (demographic: seniors and older boomers)

3) Failing to equip troops with proper safety equipment. (demographic: troops, vets & their families)

4) Invasions of privacy vis-a-vis the Patriot Act and libraries, TIA w/Poindexter, Justice and abortion records, etc (demographic: Dems AND INDEPENDENTS, because it's a key issue both abhor)

5) Jobs, in the swing states where it's high enough to matter and higher under Bush (demographic: this one keeps OR and MI in our column and gives a real shot at OH and CO).

Instead, it'll be an issue of the week, so the public will chalk it up to negative campaigning. Ya gotta have few enough for folks to list them on one hand and repeat it a thousand times. That's how PR works, not on fresh bursts of short term outrage.

Posted by: Kevin Hayden | Mar 22, 2004 5:43:09 PM

While I am appalled by the latest relevations, I am not sure there is tremendous political hay to make here. It is hard to consistently argue that the bill cost more than we were told and to argue that a more costly benefit is what was needed on policy grounds(even though both may very well be true). I think the new information can best be used to neutralize Bush's ability to use the Medicare bill as a campaign device.

p.s. I doubt Scully needed much "Badgering" to threaten to fire the actuary. He's been known to say far worse.

Posted by: Stuart | Mar 22, 2004 5:49:26 PM

so $12,800 per senior over 7 years works out to be about $1800 per year in government "financing." If you add the deductible ($250, but moving up) and the premiums ($35 per month or $420/year, but only an estimate), you get $2470 per senior per year in government + out of pocket costs.

Sounds like a lot, but most of the data I've seen (Acturarial Research Corp. analysis for the Kaiser Family Foundation, June 2003 - based on CMS survey data) indicate that number is about in-line with seniors with coverage (average spend $2,775 for retirees, $2,864 for Medicaid seniors vs. $1,356 for seniors with no insurance)

I'm still question that lack of cost-containment strategies in the bill. There doesn't seem to be much in the way of putting a check on run away drug spending.

Posted by: jjj | Mar 24, 2004 4:23:56 PM

"We have a template in our heads for understanding liberal overstretch: liberals are utopian, technocratic, they believe government can do more than it can, they don't respect the role of culture and markets. It's the Great Society story, and it had plenty of truth to it -- back then."

This is exactly the kind of mindset that liberals have to get themselves out of before we can make real progress on our economic and social problems.

The Great Society was a "mistake"? The national poverty rate was cut in half between 1960 and 1979. An example of "overstretch"? European countries spend far more now on social welfare than 60s American liberals ever dreamed of, as everybody who read this blog well knows.

Sure, liberals made mistakes in the 60s. But when conservatives get inside our liberal heads and convince us to apologize for our successes, and to start negotiating against our own values, we might as well just throw in the towel.

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