A lot of conservatives are confused about Part D, the prescription drug benefit that was added to Medicare in 2003, and its significance for Rick Santorum’s presidential campaign. Most believe Part D was an unnecessary and wanton expansion of federal growth. Many also take seriously charges made by Mitt Romney’s surrogates that the vote cast in favor of the program by then-Senator Santorum undermines any claim he has to fiscal conservatism. They are mistaken on both points. First, the addition of drug coverage to Medicare was inevitable. The public overwhelmingly supported the concept and the Democrats had repeatedly pledged to make it a top priority when they finally regained control of Congress. Second, Santorum’s Part D vote actually bolsters his credentials as a fiscal conservative.
In 2003, the Republicans had only two real options regarding Medicare prescription coverage: (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. Thus, President Bush stole the issue from the Democrats and, with much wrangling, convinced majorities in both houses of Congress to support option two. Part D was created by the Medicare Modernization Act of 2003 (MMA), which passed in the House with a slim majority that included such notorious spendthrifts as Paul Ryan and was pushed over the top in the upper chamber with the votes of Santorum and 53 other Senators, including several current Romney surrogates.
MMA established a system in which private insurers competed with one another to provide health and prescription drug coverage to seniors. The idea was that this competition would put downward pressure on Medicare costs in general, and the first signs that it was beginning to work came in the area of prescription drugs. Part D went into effect in 2006 and, by 2007, some if its initial critics began to acknowledge its efficacy. The Washington Post, for example, grudgingly admitted that “the new Medicare drug benefit appears to be slowing the growth in national spending on prescription medicines because the drug plans are negotiating lower prices with drug companies.… In the program, private insurers negotiate prices with drug companies as they compete to attract Medicare beneficiaries.”
This result was precisely the opposite of what the program’s critics had predicted, and it made the Democrats very nervous indeed. They correctly saw the success of Part D’s emphasis on the free market and patient choice as a threat to their plans to implement a government-run health care system. These Democrat fears were stoked by the obvious enthusiasm shown by low-income and minority seniors for Medicare Advantage (MA), the primary vehicle through which patients acquire Part D. MA appeals to these patients precisely because its benefits, including prescription drug coverage, are more comprehensive than those of traditional fee-for-service Medicare. Shortly after retaking the reins of Congress in 2007, therefore, the Democrats began casting about for ways to sabotage the program.
An enthusiastic participant in this sabotage was then-Senator Barack Obama. And, as President, he stepped up the attacks by approving Obamacare’s $200 billion cut in the program’s budget. But, despite such skullduggery, Part D has been a huge success. As James Capretta reported last June, “The program has exceeded all expectations… the drug benefit’s costs for the first decade are coming in 42 percent below what was predicted at the time of enactment.” This is why Paul Ryan proposed a Medicare reform package designed to take advantage of the free market dynamics that made Part D a success. The Ryan proposal has since been augmented by features suggested by Democrat Senator Ron Wyden, and their bipartisan plan is now widely considered the most promising proposal for getting Medicare costs under control.
Thus, Santorum’s vote in favor of Part D enhanced his credentials as a fiscal conservative, and not merely because it helped set the stage for the Ryan-Wyden plan. As he put it in a recent interview, “There were some very good things in Medicare Part D, with private sector health care reforms like health savings accounts which I worked hard to get into that bill, and there were a lot of other reforms to the Medicare program. It’s a private sector run health care program — government paid for — but private sector run.” He readily admits, of course, that it was still a tough call for him because the compromise that led to Part D’s passage didn’t include a proper funding mechanism. Politics is the art of the possible, however, so he declined to allow the perfect to be the enemy of the good and voted for the bill.
And Part D’s subsequent demonstration that free market competition will rein in health care costs is no small thing. Combined with a new study from the American Enterprise Institute showing that competitive bidding “could save Medicare $339 billion over ten years while maintaining basic benefits and without raising taxes,” it provides a powerful argument for repealing Obamacare and replacing it with something like the Ryan-Wyden plan. But Santorum is the only GOP candidate who can make that case in the general election. Do the fiscal purists and Romney shills who insist that Santorum’s Part D vote marks him as a “big-government conservative” really believe that the author of Romneycare can make this argument in a debate with Barack Obama without being laughed off the stage?
As Santorum said about Obamacare in a recent GOP debate, “We can’t give this issue away in this election. It is about fundamental freedom.” And giving Romney the GOP nomination will be tantamount to taking the issue off the table. This will be particularly devastating if, by Election Day, the voters have been convinced by Obama and the media that the economy is improving. Should that contingency arise, Romney would have nothing left to talk about. If, on the other hand, Santorum is the Republican nominee, Obamacare will still be on the table and he is aggressive and articulate enough to go after the President on the grounds that it is a fiscally unsustainable flop as well as an outrageous assault on our basic liberties. Santorum’s Part D record makes him more rather than less credible on both points.
It allows him to emphasize the cost-controlling successes of market-based programs and compare them to the well-documented increases in health care costs already caused by the ironically named “Affordable Care Act.” Moreover, it permits him to juxtapose the freedom of patient choice encouraged by Part D with the heavy-handed government coercion that is the hallmark of Obamacare. Santorum’s 2003 “Aye” for Part D is a feature, not a bug.
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