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Archives | (July 2003)
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The Prescription Drug Benefit: Boon or Boondoggle?
------------------------------------------------------------------ Page 1 of 6 There is no doubt that prescription drug costs are rising out of control and that the problem hits senior citizens hardest of all. In 2002, Americans spent almost $175 billion on outpatient prescription drugs, an increase of 13.2% over 2001. Even as health care costs rose by an average of 7% over the past decade, prescription drug costs increased an average of 12%! There is little doubt that they are a major factor driving this growing burden. Today, spending on health care accounts for 13% of Gross National Product, and the percentage continues to rise. Until health care costs are brought under control, however, there is a more immediate need to provide relief to the millions of senior citizens who too often face the painful dilemma of choosing between food and medicine. To put their problem in perspective, in 1965, the average senior citizen spent around $65 a year on prescription drugs. In 2002, that figure had increased to $2,149 – 35 times as much as in 1965! Congress is trying to respond to the problem by offering a prescription drug benefit to Americans eligible for Medicare. On the surface, this approach seems logical enough. Besides, government-administered programs such as Medicaid, which is paid for by the states, already reimburse the costs of nearly 22% of all prescriptions written in the United States. Indeed, Medicaid now accounts for around 20% of state spending, and prescription drug costs account for 20% of all Medicaid outlays. So, the precedent already exists. Indeed, a significant proportion of Medicaid beneficiaries are low-income senior citizens. It would appear, at least at first glance, that Congress is doing its job – responding to a public need. But, as is usually the case in Washington, there is more to what’s going on than meets the eye. The real question is whether the Medicare drug benefit is going to be a boon for seniors, or just one more boondoggle. There are several competing plans for the drug benefit, but the most likely one is expected to cost $400 billion over the next ten years or $40 billion annually. If a somewhat more generous program is adopted that figure could rise to as much as $66 billion a year! Moreover, even if the lower figure is initially adopted, the history of federal benefit programs suggests that $40 billion a year is just the beginning. Of course, if the program guarantees good health to senior citizens, it would be well worth it – the only trouble is it probably won’t, because, like the rest of our health care system, its focus is on treatment after you get sick instead of keeping you well in the first place! |
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