Milton and Rose Friedman once wrote, “What would you think of someone who said, ‘I would like to have a cat provided it barked?'” The context was a missive in which they argued that the laws of bureaucracy are like the laws of biology: pretty inflexible. “The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of governmental agencies once they are established,” they wrote. Centralized bureaucracy is by its nature slow and cumbersome and it’s foolish to think it’s going to be anything but that. Yet some people persist in thinking that better management will solve everything.
Many critics of the Medicare Prescription Drug benefit (also known as “Part D”) seem never to have perused the Friedmans. For example, the National Committee to Preserve Social Security and Medicare (NCPSSM) complains about a “privatized prescription drug plan so confusing and complex millions of seniors have not signed up.” Over at the leftist blog TPM Cafe, Kate Steadman gripes that in order to meet the Department of Health and Humans Services’ enrollment goal, “more than 10 million will have to overcome the ‘choice,’ confusion, and frustration to participate in the drug benefit.”
While the problems with the Prescription Drug benefit have been exaggerated for political purposes (see this Washington Post article for a more sanguine report), there are, undoubtedly, many seniors who find it confusing. Naturally, the critics think they could design a much better program. NCPSSM calls for a benefit that allows “seniors to get prescription drugs directly from Medicare while requiring Medicare to negotiate the lowest prices for seniors.” Steadman claims that “the simple way of designing this bill was to just add drug coverage to Part B (the outpatient services insurance) and adjust premiums accordingly.” “The first problem with Part D, unlike Medicare,” she also claims, “is that enrollment is opt-in, rather than opt-out.”
The problems with the Prescription Drug benefit stem not from flaws in its design. Rather, as the experience with the initiation of Medicare shows, they are the natural consequence of trying to enroll millions of people in a government program over a relatively short period of time. Similar problems occurred during the initiation of Medicare in 1966. In 1966 most seniors were automatically enrolled in Medicare Part A, which covers hospitalization. Yet a New York Times article from September of that year noted that the “complexity of the Federal Medicare program…has caused much confusion among the older persons it was designed to protect against the economic hazards of illness.” Furthermore,
Plan participants are raising questions about the formula used to arrive at “reasonable costs” the Government will pay for hospital and medical services, and about the requirement of a physician’s certification of the need for certain services.
In a previous article that year, the Times reported that,
Though the Federal Medicare program for persons aged 65 went into effect last Friday, there apparently remains a good deal of confusion about what supplemental private insurance is being offered and whether it is worth buying.
That confusion, as well as the belief that Medicare alone provides sufficient protection, prompted many persons to allow existing policies to expire on July 1, without even considering the supplemental plans being offered by the companies.
At the time, Medicare Part B was optional. According to another Times article, many people did not sign up because they erroneously believed that doing so meant they would not be able to choose their own doctor.
Interestingly, a debate has broken out at TPM Cafe over whether to extend the May 15 deadline to sign up for the Prescription Drug benefit. A similar debate occurred in 1966 over Part B, with Congress and President Johnson eventually agreeing to extend it two months. Despite the extension, about a million seniors failed to sign up.
It doesn’t take much imagination to see that had the Prescription Drug benefit been designed as Steadman wished, it would have simply created different problems. For example, had the benefit been opt-out instead of opt-in, undoubtedly many seniors who would have preferred to maintain private coverage likely would have failed to realize that they needed to opt-out of the Prescription Drug benefit and would have subsequently lost their private coverage.
Close to 40 million seniors are eligible for the Prescription Drug benefit. It is impossible to enroll that many people in a new program without serious administrative headaches and mass confusion among potential enrollees. To believe otherwise is to live in fantasyland. But who knows? Maybe the folks at NCPSSM and TPM Cafe own cats that actually bark.