ObamaCare v. Prescription Drugs

Andrew writes:

Unlike many of these tea-partiers and their supporters, I actually took on the Bush administration's big government tendencies, fiscal recklessness and massive expansion of executive power at the time (and was largely cast out of the conservative coalition as a result). I opposed the Medicare prescription drug benefit as unaffordable - and no one can argue that what looks like the current healthcare reform would cripple future finances as profoundly as that Bush entitlement.

Call me "no one" then:  I don't see how you even could argue that this bill will cost less than Medicare Part D.  I mean, we don't have a bill, so technically, who knows.  We have a series of statements that Obama wants to do a bunch of stuff that does not really sum to the $900 billion he promised--his plan seems, from the vague description to be more generous on the benefit side, and less stringent on the revenue side, than the one put forward by Max Baucus at the same price.

But you want to add 20-30 million to the insurance rolls, many of whom require subsidy.  A substantial portion of those will be going straight to Medicaid.  Obama has pegged the 10 year cost at $900 billion, a figure that is not likely to be too low high.  The annual cost of Medicare Part D, even leaving premiums the retirees pay, is less than 50 billion according to the Medicare trustees. 

Yes, yes, Obama says he'll pay for it.  We pay for Medicare Part D, too, with premiums . . . sort of. Even assuming that seniors will let you take away the Medicare Advantage "overpayments" which currently fund extra benefits for those in the plan, this will save only $149 billion over a 10-year period.  And that's the concrete, politically likely part of Obama's plan.  All the other parts, like the excise tax on "Cadillac coverage", are either politically trickier, raise little money, or both.  Moreover, unless the "automatic spending cuts" that Obama has promised actually work, after the ten year window, the thing explodes.  And automatic spending cuts have been tried and failed with Medicare already. 

In the late 1990s, Congress enacted a rule saying that if costs grew too fast, there would be automatic cuts to doctor reimbursements.  The problem is that just as with the AMT, every year, Congress ritually repeals them, because if they don't, the doctors will stop taking Medicare patients, who are already not very profitable.  So the "automatic spending cuts" have so far saved approximately zero dollars; depending on who you ask, doctors are now overpaid by 20-40%. 

In short, it is not only not true that "no one" believes that this will cost more than Medicare Part D, it's not really very reasonable for anyone to disbelieve it.  We are, after all, preparing to provide health care for millions of more people, who will not only be consuming prescription drugs, but also heart catheterization and asthma treatment and the leg amputations that doctors apparently prefer to providing routine diabetes care.  Prescription drug costs are on the order of 10% of overall spending, even for Medicare.

Of course, maybe Obama will succeed in cutting costs and thereby pay for his program.  But if he cuts costs for the new people, he'll cut costs for Medicare Part D, too.

That doesn't mean that it's a bad idea, of course.  But you cannot be credibly mad at Bush for the budget problem inherent in Medicare Part D, and give Obama a pass.  This is a bigger entitlement that has the potential to be a much, much bigger disaster for our political system, for our budget, and potentially even for the beneficiaries, then a modest prescription drug benefit for Medicare's 45 million beneficiaries.  Me, I was against both of them.  But I'm funny that way.