- The Washington Times - Sunday, November 30, 2003

Last month, I never would have believed the Republicans and AARP would team up to pass a Medicare reform bill a year before the 2004 election.

The long-stalled prescription drug coverage bill will not only dramatically expand Medicare, it will take a major Democratic vote-getting issue off the table. The endorsement by AARP — one of the Democrats’ most powerful allies in the health care wars — of the measure inoculates the GOP and President Bush against any further attacks on this issue.

But the longer-range fight over Medicare’s future is not going away. This is a big-government, big-spending bill whose future entitlement costs will explode when Baby Boomers begin retiring around 2010. In the final weeks of the debate on Capitol Hill, some two-dozen fiscally conservative groups — some of Mr. Bush’s biggest supporters — came out against the bill.

They used words like “terrible,” “horrible” and “depressing” to describe how they felt about the White House-backed bill that they fought to change.

“It’s a triumph of Republican politics and Democratic health care policy,” says Robert E. Moffit, director of health policy at the Heritage Foundation. “Republicans have laid the groundwork for a universal entitlement in Medicare of unknown costs that will continue to grow relentlessly under the inevitable pressure to fill in the remaining gaps in coverage.

“We will see a contraction of private coverage of prescription drugs and an expansion of government benefits,” he says.

Mr. Moffit and other conservative policy strategists say the bill was a setback for conservative reform and a major retreat by Mr. Bush, who had originally embraced a far more market-driven approach in his 2000 campaign.

That approach, spelled out in a bipartisan health care commission in 1999, was modeled on the Federal Employee Health Benefits Plan, which allows government workers to choose from a broad range of competing private health care plans that have effectively restrained costs.

The biggest setback for these conservatives is the bill’s rejection of a proposal to force Medicare to compete with private plans nationwide. In an effort to placate Democrats who did not want any competition, the bill calls for a temporary demonstration program in six cities at the end of this decade.

“That’s only 1.6 percent of all the metropolitan areas in the United States,” Mr. Moffit says. “Give me a break.”

Similar complaints were voiced by other conservative policy analysts at the American Enterprise Institute, the Cato Institute and elsewhere.

“To some degree, Republicans really got rolled on this,” says Michael Tanner, chief domestic policy analyst at Cato. “They backed themselves into a corner by promising in the last election a prescription drug bill. It was either walking away from that campaign promise or accepting a bad bill.”

Some powerful conservatives backed the bill. Former House Speaker Newt Gingrich argued that its enlarged tax-free medical savings accounts would reap big savings and lead to further marketplace reforms. Grover Norquist of Americans for Tax Reform seemed to side with that view. The Galen Institute’s Grace-Marie Turner, initially an opponent of the bill, says there was on balance enough incentives for the private medical care market — preferred providers and health maintenance organizations (HMOs) — to participate in Medicare.

And, in the end, Republican leaders and the administration offered enough public subsidies — billions more for rural hospitals, medical networks and tax breaks to keep corporations from dropping their drug coverage plans — to bring the AARP and Democrats like Sen. John Breaux of Louisiana and Max Baucus of Montana on board.

But this bill is a long way from the competitive system conservatives had envisioned and hoped Mr. Bush would champion. Among some of his principled conservative critics, disappointment has led to doubt about whether they can trust him to hold his ground in future reform debates.

“I don’t think this is a good sign for the future of real reform of Social Security,” Mr. Moffit says. “There’s a disturbing pattern here. It is not enough to send broad principles of reform to Capitol Hill and let Congress work its will, without direct presidential involvement.”

But no one now doubts this bill is a major political victory for Mr. Bush that will boost his re-election chances. He can go to the voters next year and say he promised a prescription drug benefit, kept his word and got it passed. Even his critics concede this now.

“Politically, this is a very popular bill,” Mr. Tanner told me. “The costs don’t come until well down the road.”

Massachusetts Sen. Ted Kennedy is howling that this bill will eventually privatize Medicare. But next year, in the midst of the presidential campaign, seniors will be getting their drug discount cards — a well-timed preliminary reform that will overwhelm the Democrats’ angry complaints.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist

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