The American Spectator

On the main site, David Catron attempts to clear up what he considers conservative confusion about Medicare Part D. Catron calls Rick Santorum’s vote for the prescription drug benefit “a feature, not a bug” in the former senator’s free-market credentials, one that “bolsters” rather than undermines Santorum’s claim to be a fiscal conservative.

Catron argues that the Medicare coverage of prescription drugs was so inevitable that by 2003 the Republicans’ only realistic options were to “(1) wait until the Democrats regained a congressional majority and pushed through a vote-buying scheme disguised as a drug benefit, or (2) beat them to the punch by enacting an alternative that introduced market reforms to an obsolescent entitlement program.”

In passing Medicare Part D, however, Republicans actually chose a third option: they attached some market reforms to a vote-buying scheme. Conservatives who support or excuse Medicare Part D implicitly acknowledge the vote-buying aspect of the program when they attribute the GOP’s success in 2004 to the entitlement.

You could nevertheless make the same argument for Romneycare, which Catron wisely opposes: a program passed once the Democrats regained the Massachusetts governorship would have been to Romneycare’s left. In fact, one could have made the same argument for Republicans passing a national Romneycare with a Stupak-like ban on abortion funding when it looked like Democrats were going to push for the public option if they retook the White House and Congress. For my money, the best course of action would have been for Republicans at both the state and federal level to have been more serious about free-market health care reform rather than punting on the issue as if it would never come up again after the defeat of Hillarycare.

Originally the Bush administration and even some reform-minded Democrats like then-Sen. John Breaux wanted to offer prescription drug coverage to seniors who left traditional Medicare for private sector plans. Another option was a small, targeted benefit for low-income seniors with high prescription drug costs. Instead what Congress passed and President Bush signed was an open-ended, non-means-tested program that was the biggest expansion of federal entitlements since Medicare itself.

The political benefits of Medicare Part D are ambiguous. It should be noted that George W. Bush campaigned on a prescription drug benefit in 2000 and had not signed one into law when Republicans did well in the 2002 elections. Then in 2006, Republican supporters of the program like Santorum and Romney surrogate Jim Talent were thrown out the Senate at the voters’ first opportunity. I’m not suggesting that the electorate was responding favorably to Republican inaction on prescription drugs in 2002 and in a hostile manner to the program’s enactment in 2006; 9/11 and the Iraq war, respectively, obviously were the main issues. But whatever political benefits existed were clearly short-lived (the gratitude of the pharmaceutical industry to Republicans was equally short-lived).

What were not short-lived or ambiguous were the costs of Medicare Part D. Even with the savings produced by Medicare Advantage — a genuinely free-market, competition-based component of the prescription drug benefit — federal spending and Medicare’s unfunded liabilities are still greater than they were before the program passed. And while Medicare Advantage provides real-world examples for the competition-driven lowering of costs envisioned by Paul Ryan, it does not necessarily follow that Medicare Part D will result in Ryan-like reforms. The Democrats immediately tried to kill Medicare Advantage and use the prescription drug benefit to impose price controls, which for the time being remains as likely an outcome of Medicare Part D as further free-market Medicare reform. Some studies suggest that Medicare Part D’s net effect so far has to been to crowd out private sector prescription drug coverage and spending.

In other words, the lack of a “proper funding mechanism” isn’t a small thing. It’s a big thing. Very few conservatives would consider a free-market reform of Medicare in general a success if it also increased the system’s unfunded liabilities by trillions of dollars and enlarged the federal role in health care. Neither should they so regard Medicare Part D as presently constituted.