Promising Drug Plan

When the legislation that created Medicare was enacted in 1965, doctors depended more on surgery than drugs to treat serious ailments like heart disease and cancer. Basic medical care for disabled and elderly Americans should include hospital care, yes, and doctor visits, yes. But prescription drugs were not on the legislative radar.

As President Clinton has repeatedly pointed out, medical care has advanced in ways that Medicare has not. Today, prescription drugs extend life spans by decades. That’s why Clinton was right Tuesday to outline a plan for adding a modest drug coverage option to Medicare. The ‘biggest benefit might be not the direct payments but Medicare’s price- bargaining power with drug makers, who shudder at the prospect of volume discounts that would cut into their record profits.

The pharmaceutical industry is already planning a $30-million, “Harry-and-Louise”-style advertising campaign to deride the president’s plan as big-government price controls. Actually the plan would do the opposite, bringing a breeze of competitive pressure to the nation’s drug market.

A congressional study of prescription drug prices in California last year found older Americans paying twice as much on average for retail drugs as managed care companies and other favored group buyers.

The Clinton plan would give Medicare recipients the option of paying a monthly $24 premium to get a modest $1,000-a-year prescription drug benefit; by 2008, a beneficiary would pay a monthly premium of $44 to be covered for up to $2,500 worth of drugs. With Medicare’s ability to bargain for better prices, that $2,500 could go much further than it does now. People would still be able to buy private “Medi-gap” policies to cover higher amounts. But the risk of out-of-control spending hovers over this measure as a larger elderly population takes more prescription medication.

Clinton proposes dedicating $45.5 billion of the budget surplus to pay for the drug coverage through 2008; some of that and other Medicare spending would be offset by efficiency savings from Medicare operations, says the White House. That is a song that’s been sung before, and too often the savings do not materialize. Tough oversight would be crucial.

Sen. Phil Gramm (R-Texas) Tuesday dismissed the president’s proposal as unnecessary, a mysterious assertion given that 15 million of Medicare’s 40 million elderly and disabled beneficiaries have no drug coverage.

Clinton’s plan will succeed only if it fulfills its promise to spend Medicare’s taxpayer dollars more wisely. The most productive step would be to pass a bill by surgeon-turned-senator Bill Frist (R-Tenn.) to expand funding for the Agency for Health Care Policy Research, an obscure body of medical researchers that has done an exemplary job of weighing the costs of medical procedures against their benefits.

Clinton’s proposal is the right thing, but caution should be the watchword to keep spending under control.