Political Hay

Medicare Mendacity

Everyone always knew the Medicare prescription drug bill would cost tons more than officially projected. So why the recriminations against those who pretended otherwise?

By 5.5.04

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The current controversy over the Medicare prescription drug benefit is an exercise in Seinfeldian absurdity. It is, quite literally, a show about nothing. Or at least until the humungous bill comes due.

If you haven't been following it, here's the latest: In a report made public Monday, the Congressional Research Service said Bush administration officials were wrong not to release cost estimates made by chief Medicare actuary Richard Foster last year for the prescription drug bill.

At the time the Congressional Budget Office had pegged the bill at $395 billion over ten years. But Foster's estimate put it between $500-$600 billion. (He later settled on $534 billion.) Democrats charge the White House deliberately suppressed the cost to ease the bill's passage.

In a letter to House Ways and Means Chairman Bill Thomas (R-Calif.), Rep. Charlie Rangel (D-N.Y.), speaks gravely of "the growing number of questions with respect to the troubling incidents affecting passage of the Medicare Modernization Act."

Now the White House probably should have released the Foster's numbers in the first place, even if -- especially if -- it might have prevented the bill's passage. The numbers would have alerted Congress to just how enormously expensive the benefit was likely to be.

But the widespread assumption underlying most coverage of this controversy -- that the CBO's numbers are wrong and Foster's are correct -- is false. The truth is we don't have any better of an idea today of how much the Medicare benefit is really going to cost than we did when Congress passed it.

The CBO's numbers are nothing more than an estimate based on certain assumptions. Ditto for Foster's numbers, except that he used different assumptions. (Did I mention that the CBO still stands by its projection?)

So whose assumptions are correct? Who knows? The Foster and CBO numbers are, to be blunt, wild guesses. No one can possibly know how much a federal program is going to cost over a ten-year period until after we have ten years' worth of bills.

The only thing we can be certain of is that costs are likely to exceed initial expectations. That's the one thing that always happens with federal programs.

Meanwhile, the Claude Raines routine used by so many lawmakers over the Medicare numbers -- they're shocked to find out it's costing more than expected -- is bogus too.

Any lawmaker who bothered to make even a cursory look at the Medicare drug bill would have known that the cost estimates weren't reliable.

As one journalist (okay, it was me in Investor's Business Daily) reported last November: "The benefit is pegged at $400 billion over a decade, although congressional aides concede it will likely cost far more."

The Democrats' argument back then was that the benefit didn't give enough to seniors due to its gaps in coverage. Their bills would have created a drug benefit estimated at between $600-900 billion. So much for their present-day outrage.

To review: The White House is accused of hiding a wild guess as to how much the benefit would cost over ten years. They supposedly did this because it was $140 billion higher than the wild guess of $395 billion the CBO cooked up and still stands by. Democrats say they're troubled by this despite the fact that they have argued all along the benefit is too small anyway. Meanwhile, we still have no idea what the benefit will really cost and won't know for a long, long time.

Well, it might make for a great sitcom.

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About the Author

Sean Higgins is a writer in Arlington, Virginia.