Dr. Feel-good: Bush and Gore peddle their drug plan

National Review, Sept 25, 2000 by Ramesh Ponnuru

T he Bush campaign had planned to spend the week before Labor Day talking about education. The governor dropped by Springfield High School in Toledo, the hundredth school he has visited during the campaign. But nobody paid much attention. The hot issue of the moment is prescription drugs for seniors. Bush ended up spending the week on the defensive, explaining that he would come up with a drug plan soon.

Perhaps Bush believed all those polls suggesting that education is the public's top priority. Actually, most voters think their kids' school is just fine, and won't be improved by presidential attention. But they really are worried about what might happen to them when they're old and sick. And while Bush appears to believe that middle-class voters want a president who is compassionate toward the poor and needy, Gore's success in pushing the drug issue suggests that they're more interested in government goodies for themselves.

It's not as though there's a pressing need for more subsidies for the elderly. In 1997, the Department of Health and Human Services found that only 2 percent of senior citizens had difficulty obtaining prescription drugs. Two-thirds of them have health plans that cover drugs. Half of them, according to the National Academy of Social Insurance, spend less than $200 a year out of pocket to buy drugs.

The need Gore's plan addresses is strictly political: The Democratic share of the senior vote slipped in 1998, and the drug benefit is designed to win them back. Now polls are showing Gore ahead of Bush in Florida (picking a Jewish running mate probably helped Gore there too). Stanley Greenberg, Gore's top pollster, wrote in The American Prospect almost a decade ago that Democrats could win back the middle class by increasing its dependence on the federal government. That was what the Clintons' comprehensive health plan was designed to achieve. Getting voters hooked on drug benefits is merely the latest tactic.

Bush's initial stance was to support a new prescription-drug benefit as part of a thorough modernization of Medicare, one that includes elements of choice and competition as well as new benefits. A commission headed by John Breaux, a Democratic senator from Louisiana, proposed such a reform, modeled on the health program for federal workers. But the Gore campaign demanded that Bush be more specific. Gore said Bush had no plan, while also deriding the plan he had-Breaux's-as inadequate.

Demands for specificity in presidential campaigns are often silly: Bush aides rightly complain that a president needs to outline broad goals but maintain the flexibility to achieve them in Congress. The demand is even more perverse in the present case because Bush could meet it only by offering a plan that concentrated exclusively on drug benefits. And that would be bad policy. John Goodman, head of the National Center for Policy Analysis and a health-care expert, points out that many seniors already have three health-insurance plans: Medicare Part A, Medicare Part B, and supplemental "Medigap" insurance. It's an inefficient system-the actuarial firm Milliman and Robertson estimates that seniors could afford full drug coverage merely by spending what is already spent on Medicare and Medigap-and adding yet another plan to it would hardly make it better.

A stand-alone drug benefit would suffer from the problem health-care economists call "adverse selection": The only people who would sign up would be people who are very likely to use the benefit. Furthermore, a federal drug benefit would cause Medigap policies to become stingier about drugs, which could leave many seniors worse off on balance. And a drug benefit would almost certainly lead to de facto price controls as the federal government tried to keep the cost of the program from exploding. Because of the way the problem has been framed, Republicans have no politically attractive options. In the House, they cobbled together a plan to encourage private insurers to provide coverage of drugs. But the insurers themselves said the plan wouldn't work because of adverse selection and insufficient funding.

Congressman Bill Thomas, a leading Republican voice on health care, urged Bush to endorse the House bill. It did help the House Republicans, who can now say they passed a drug benefit in the confidence that most people won't look at the details. But Bush did not want to endorse a plan that the Democrats already knew how to attack (by quoting the insurers, for instance). Besides, his policy wonks are a rather earnest bunch and preferred not to propose a plan that has no chance of working.

Scott Reed, the manager of Bob Dole's 1996 campaign, wanted Bush to take a different approach. Reed's Republican Leadership Coalition has gotten behind a bill by Republican senators Bob Smith and Wayne Allard. They would offer a new drug benefit at no cost to taxpayers: The expense would be covered by raising the Medicare deductible to $675. Seniors would cover expenses below that figure.