Friday, October 7, 2005

Real leadership is never easy. So it deserves to be recognized. That’s why we ought to congratulate the Republican Study Committee and House Minority Leader Nancy Pelosi, California Democrat, for offering to help pay for Hurricane Katrina reconstruction by returning the federal money they won for highway and byway projects in their districts — projects tucked away in the latest highway bill.

Unfortunately, even if all their colleagues go along with the current challenge to turn back half their transportation “earmarks,” or special projects, that will raise only $25 billion. Congress already has appropriated $62 billion for Katrina relief, and some expect the final tab to exceed $200 billion.

Clearly, we’ll have to trim much more from the federal budget if we are to come close to offsetting the rising cost of fixing the Gulf Coast. Failure to offset this massive spending increase will lead only to a still-larger deficit, which would crowd out other worthy priorities and lead us to borrow more from undependable foreign markets.

All the more reason to consider a bold idea floated by Sen. John McCain, Arizona Republican, and others: Cancel, or at least delay, the huge Medicare drug entitlement set for Jan. 1.

Mr. McCain, wisely enough, says we should abandon the Medicare drug program and go back to the drawing board and design a rational and responsible drug benefit. But even the RSC’s more modest suggestion to delay it a year is a big step in the right direction.

According to the Bush administration, the drug benefit is projected to cost $37.4 billion next year alone, the first down payment on a massive entitlement that will add $8.7 trillion to Medicare’s long-term debt. A simple delay would save a lot.

Some painful choices have to be made for the hurricane rebuilding projects. But a delay in a drug program that doesn’t yet exist isn’t one of them. Roughly 3 in 4 seniors already have some form of drug coverage.

Congress should help the minority who are too poor to buy private drug coverage, are ineligible for Medicaid or aren’t covered by former employers. And the new Medicare drug-discount cards, which already have given millions of seniors big savings, could how to help directly poor seniors who need it.

Moreover, the intended beneficiaries aren’t exactly clamoring for it. Recent surveys show about a third of seniors have a favorable impression of the benefit, about a third have an unfavorable impression, and about a third are neutral or don’t know enough to form an opinion.

Why should seniors be enthusiastic about such a program? Many already covered by former employers will have their coverage either scaled back to a minimum set by Congress or dropped altogether. Because taxpayers will pick up the tab, the nonpartisan Congressional Budget Office estimates 2.7 million seniors will be moved out of their existing private coverage next year. Some estimate still more seniors will be forced into the program after, and virtually all analysts agree the program will accelerate decline of private, employer-based coverage.

And the 6.4 million poor seniors whose drugs are covered under Medicaid, of course, will be required to enter the Medicare drug program, regardless of their personal wishes.

To make matters worse, many forced into the Medicare drug program will, within the year, learn firsthand of its infamous “doughnut hole.” That’s the big coverage gap that forces some high-cost beneficiaries to pay 100 percent of their drug bills until they spend $3,600 out of pocket. Given escalating drug costs for the sickest seniors and the bill’s design, the Kaiser Family Foundation estimates 6.9 million seniors will fall into the doughnut hole in 2006. That will be repeated each year.

In other words, next year we’ll have a costly new government program that few want beforehand and fewer will like after it has gone into effect. We also have an immediate and extreme need to free some funds for hurricane victims in desperate need of relief. We have the chance to reallocate tens of billions of dollars from a bad idea to a necessary effort.

So how about it, Congress? Why not cancel the drug entitlement and target assistance where it is most needed? If not, at least delay it and continue aid to seniors who need it most through a juiced-up Medicare discount-card program.

Nobody disputes the urgency of helping poor seniors get drugs they need. In either case, Congress needs to take another crack at designing a Medicare drug benefit that’s rational, responsible and affordable.

Robert Moffit is director of health policy studies at the Heritage Foundation.

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