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Paul Krugman on Medicare D

by Paul Krugman Tuesday, May. 16, 2006 at 7:36 AM

The Bush administration turns out to be the reverse Midas, everything it gets its hands on from reconstruction of New Orleans to drug reform turns to crud.

New York Times
May 15, 2006
D for Debacle

Today is the last day to sign up for Medicare Part D, the
prescription drug benefit. It appears that millions of Americans,
confused by the array of competing plans or simply unaware of the
cutoff date, will miss the deadline. This will leave them without
drug coverage for the rest of the year, and subject to financial
penalties for the rest of their lives.

President Bush refuses to extend the sign-up period. "Deadlines," he
said last week, "help people understand there's finality, and people
need to get after it, you know?" His real objection to extending the
deadline is probably that this would be an implicit admission that
his administration botched the program's start-up. And Mr. Bush
never, ever admits mistakes.

But Part D's bad start isn't just another illustration of the
administration's trademark incompetence. It's also an object lesson
in what happens when the government is run by people who aren't
interested in the business of governing.

Before we get there, let's talk for a moment about the problems older
Americans have encountered over the past few months.

Even Mr. Bush has acknowledged that signing up for the program is a
confusing process. But, he says, "there is plenty of help for you."
Yeah, right.

There's a number that people needing help with Part D can call. But
when the program first went into effect, there were only 300 customer
service representatives standing by. (Remember, there are 43 million
Medicare recipients.)

There are now 7,500 representatives, making it easier to reach
someone. But should you believe what you're told? Maybe not. A survey
by the Government Accountability Office found that when Medicare
recipients asked for help in determining which plan would cover their
medications at the lowest cost, they were given the right answer only
41 percent of the time.

Clearly, nobody in the Bush administration took responsibility for
making Part D's start-up work. But then you can say the same thing
about the whole program.

After all, prescription drug coverage didn't have to be bafflingly
complex. Drug coverage could simply have been added to traditional
Medicare. If the government had done that, everyone currently covered
by Medicare would automatically have been enrolled in the drug benefit.

Adding drug coverage as part of ordinary Medicare would also have
saved a lot of money, both by eliminating the cost of employing
private insurance companies as middlemen and by allowing the
government to negotiate lower drug prices. This would have made it
possible to offer a better benefit at much less cost to taxpayers.

But while a straightforward addition of drug coverage to Medicare
would have been good policy, it would have been bad politics from the
point of view of conservatives, who want to privatize traditional
social insurance programs, not make them better.

Moreover, administration officials and their allies in Congress had
both political and personal incentives not to do anything that might
reduce the profits of insurance and drug companies. Both the
insurance industry and, especially, the pharmaceutical industry are
major campaign contributors. And soon after the drug bill was passed,
the congressman and the administration official most responsible for
drafting the legislation both left public service to become lobbyists.

So what we got was a drug program set up to serve the
administration's friends and its political agenda, not the alleged
beneficiaries. Instead of providing drug coverage directly, Part D is
a complex system of subsidies to private insurance companies. The
administration's insistence on running the program through these
companies, which provide little if any additional value beyond what
Medicare could easily have provided directly, is what makes the whole
thing so complicated. And that complication, combined with an obvious
lack of interest in making the system work, is what led to the
disastrous start-up.

All of this is, alas, terribly familiar. As John DiIulio, the former
head of Mr. Bush's faith-based initiative, told Esquire, "What you've
got is everything — and I mean everything — being run by the
political arm." Ideology and cronyism take complete precedence over
the business of governing.

And that's why when it comes to actual policy as opposed to politics,
the Bush administration has turned out to have the reverse Midas
touch. Everything it gets its hands on, from the reconstruction of
Iraq to the rescue of New Orleans, from the drug benefit to the
reform of the C.I.A., turns to crud.

Copyright 2006 The New York Times Company

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