Listen to the elders complain about their new Medicare drug
benefit. You'd think that for $724 billion over 10 years, the taxpayers
could have bought them more happiness.
But no, they are angry over the program's complexity. They must
choose among dozens of plans. The plans cover different drugs, and charge
different premiums, deductibles and co-payments. Medicare beneficiaries are
now attending three-hour drug-benefit seminars and hurling questions at
their pharmacists. There are reports of people breaking down in tears of
frustration.
Such was not the vision of the free-market swingers who created
this extravaganza of confusion. They opposed adding a simple
"one-size-fits-all" drug benefit — bland as Al Gore — onto the existing
Medicare program. Instead, they would lead Medicare's 43 million
beneficiaries into the promised land of choice. As the swingers painted it,
private insurers would compete for the elders' affections by offering
exactly the drugs they wanted at low cost.
Only 39 percent of older Americans can figure out the options,
according to a survey by the Kaiser Family Foundation and the Harvard School
of Public Health. The questionnaire also found that 37 percent were simply
not going to sign up, and 43 percent didn't know whether they would.
That's what happens when people are overwhelmed by choice,
according to Barry Schwartz, author of "The Paradox of Choice: Why More Is
Less." They don't make a choice. They opt out.
"The only good thing about this plan is it's better than
nothing," says Schwartz, a professor of psychology at Swarthmore College.
"So if you have nothing, you can throw a dart and you're better off. People
who already have drug coverage (say, from an employer or through Veterans
Affairs) could throw a dart and be worse off."
The Medicare Prescription Drug Finder (at www.medicare.gov) is
supposed to help you compare plans. The finder lets you type in your
medications and up come the plans that offer them.
Several problems here. One is that the listed drugs often come
with asterisks. An asterisk may lead to the words "quantity limits," which
means you can get only a certain number of pills a month. Or it may instruct
you to "call the plan." People calling plans say they've been put on hold
for 40 minutes before they gave up.
Let me interrupt this column with a minute of silence for the
taxpayers. The discussion so far has centered on the beneficiaries'
displeasure. What about the people who will be picking up most of the
extravagant bills?
During the 2000 presidential campaign, the conservative media
jumped all over Al Gore for proposing a drug benefit with an estimated price
tag of $253 billion over 10 years. "Mr. Gore seems unconcerned about costs,"
opined The Wall Street Journal.
The newspaper much preferred George Bush's
magic-of-the-marketplace proposal. Bush insisted his "conservative" plan —
much like what we now have — would require only $158 billion over 10 years.
That was less than one-quarter of what it will really cost.
No doubt Gore's plan would have exceeded his estimate. But its
numbers would have been far closer to the mark than Bush's fantasy. The
plan's simplicity made it harder to conceal its true costs.
And it was based on the proven assumption that Medicare is a
very efficient health-insurance program. Medicare's indirect expenses are
only 2 percent. The overhead for private insurance companies is 25 percent.
Unlike Medicare, private insurers must advertise, enrich their top execs and
deliver a profit to investors.
These very rough calculations also assume that the time of the
beneficiaries, their children, their pharmacists, their doctors, Medicare
officials, state health and elderly affairs workers, et al., is not worth
anything. How many man-hours have gone into explaining "creditable
coverage," "true out-of-pocket costs" or "Medicare Advantage" plans? How
many gray hairs have been pulled out in trying to get a live human being at
Medicare's toll-free number? (If you want to bother, it's 800-633-4227.)
Is no one happy with the new Medicare prescription-drug benefit?
Actually, the insurance and drug companies are happy. The insurers have been
generously cut into the deal. And Medicare law forbids the government to
negotiate prices with drug manufacturers.
Yes sir, the insurers and drug makers are real happy. As the
beer commercial says, "This Bud's for you."
