Wrong prescription for bulging deficit


CHICAGO - When your wages are falling, your rent is rising and the car's in the shop, you know it's time to get control of the family budget. Congress and the president got the news last week that the federal deficit will reach a record $400 billion this year. So they wasted no time agreeing on what to do: Spend more money.

If these people had been with Custer at Little Bighorn, they would have invited more Indians.

Washington politicians often resemble Oscar Wilde, who said he could resist anything except temptation. As the fiscal picture gets more terrifying, our leaders have gotten more profligate. The latest exercise in irresponsibility is the push to provide Medicare recipients with coverage for prescription drugs, a desirable benefit that no one has figured out how to pay for.

Three brief years ago, the government was sitting atop a surplus of $236 billion. Today, the surplus is gone, and no one is trying to bring it back.

Thanks to tax cuts and persistent economic troubles, federal revenues have shrunk. Instead of scouring the budget for every possible way to conserve cash, though, the administration and Congress are holding a contest to see who can throw away the most money in the shortest time. Federal spending has ballooned by 20 percent in the last three years.

One program that is rapidly getting bigger is Medicare, which pays doctor and hospital bills for the elderly. Left alone, its outlays are expected to grow by 54 percent between now and 2010. That's the bad news. The worse news is that, barring drastic action, spending will explode once the baby boom generation starts to reach retirement age in 2011.

But our leaders prefer not to reconsider the unaffordable promises they've made. They have a different idea: Overextend the program still further. The prescription drug benefit approved by the Senate Finance Committee last week, the biggest enlargement of Medicare since its creation in 1965, would cost an estimated $400 billion over the next decade. Republican Sen. Don Nickles of Oklahoma, chairman of the Budget Committee, predicts it may be double that amount.

Many Democrats nonetheless consider this plan stingy. We can expect them to try to make it more generous later, and Republicans probably won't put up fierce resistance.

It's not impossible to protect seniors against ruinous prescription drug bills without wrecking the federal budget. It's just not politically appealing. The goals of fiscal prudence have lost to the urge to buy people's votes with their own money.

Less than half of Medicare recipients spend more than $2,000 a year on prescription drugs, and only 17 percent spend more than $5,000. The first priority of any new program should be to shield the elderly from truly catastrophic expenses, not to cover routine ones.

That would mean limiting benefits to those with the biggest drug bills and those with the lowest incomes. It would also mean encouraging Medicare recipients to enlist in managed care programs that control costs better than the old fee-for-service approach.

But the political priority is furnishing benefits that are high, wide and handsome. The Senate measure does so by starting coverage at a low level: Recipients who pay a $35 monthly premium would face a deductible of just $275. Above that level, Medicare would pay half the cost of all drugs up to $4,500.

At that point, though, something weird happens: namely, nothing. For drug expenses between $4,501 and $5,800, the recipient is entirely on his own. Then, for expenses above $5,800, Medicare would provide 90 percent coverage. This is known as the "doughnut" approach, for that big hole in the middle.

The Senate plan is a way to maximize the number of beneficiaries, and thus the number of grateful constituents - while keeping the total cost from running totally out of control. Just about everyone will get something, and if it's not everything they want, it's more than they're getting now.

There's another clever political tactic embedded in the new benefits: They won't take effect until 2006. So the president and members of Congress can take credit for passing a prescription drug bill when they face the voters next year. Any shortcomings in their handiwork, however, won't be fully evident to seniors until well after the election.

A lot of Republicans tell us the deficit is useful because it forces our leaders to do something about excess spending. Judging from this bill, our leaders have figured out exactly what to do: Enjoy it.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays and Fridays in The Sun.

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