Some see Medicare plan as Robin Hood in reverse

For now, borrowing to pay for $400 billion cost of prescription drug benefit

November 30, 2003|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - In a perfectly equitable world, would the government have passed legislation that would give older Americans a prescription drug care plan that will cost $400 billion over 10 years?

To some economists, the prescription-drug benefit approved by Congress on Tuesday looks like Robin Hood in reverse. After all, there are millions of American workers who don't have any health insurance at all, yet the government has chosen to expand the Medicare program for older Americans.

But while some economists on the left and right might wring their hands, younger workers don't seem to be complaining.

According to polls, members of the post-boomer generation are actually more enthusiastic than their elders about this new legislation. Their feeling is partly due to a desire to see their parents and grandparents save money on drugs. And many of these younger adults probably haven't quite focused on who will pay for the program or how.

The Republican champions of the drug plan say it will help hold down health care costs by letting private companies compete with Medicare and introducing some means-testing, but critics on both the left and right warn that costs could rise faster than projected.

For now, until a tax or some other revenue source is found, all the benefits will be financed by borrowing. It's not that poor older Americans don't need help paying for drugs. The question among economists is who should be paying.

`Effectively bankrupt'

"Given the demographics, paying the elderly their Social Security and medical benefits will effectively bankrupt the next generation and gravely damage the economy," said Laurence J. Kotlikoff, the chairman of the economics department at Boston University.

"The elderly as a group should be paying the costs of this insurance, not leaving the bill to the next generation," Kotlikoff said.

The rate of poverty used to be higher than average among the elderly, but over the past four decades it has been reduced by two-thirds and is now lower than the national average. Meanwhile, the number of younger adults without health coverage has been increasing.

Yet younger workers, far from begrudging the elderly universal insurance, have repeatedly told pollsters that they favor adding new drug benefits to Medicare.

In the University of Pennsylvania's National Annenberg Election Survey taken shortly before Congress' vote on the drug plan, adults younger than 50 favored the legislation by 43 percent to 38 percent.

In contrast, the respondents between ages 50 and 64 opposed the legislation, 49 percent to 39 percent, and among those older than 65 the margin of opposition was wider still, 49 percent to 33 percent.

The national telephone survey, conducted among 860 adults Nov. 19-23, has a margin of error of 3 percentage points.

The opposition from the older Americans is due in large part to the concern, especially prevalent among those older than 65, that Medicare could be jeopardized by the new competition from private companies.

That problem looms less large to younger workers because they're accustomed to private health plans - and to less-than-ideal insurance.

In polls comparing retirees on Medicare with workers on private insurance plans, the retirees have consistently expressed more satisfaction with their health insurance.

`Can find pile of money'

So why don't the young workers already struggling to pay for their own adequate health care worry about the cost of new benefits for the elderly?

"People always tend to believe that the government can find a pile of money somewhere to pay for new benefits," said Robert Blendon of the Harvard School of Public Health, an expert on public opinion about health issues.

"The issue of cost would have traction with young voters only if they were proposing to finance the prescription-drug benefit by raising the payroll tax, but that proposal is not on the table right now."

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