Bush on the Home Front: Domestic Policy Triumphs and Setbacks

5. Drug Coverage for Seniors

Like education, health care is an issue that historically has been dominated by the Democratic Party. President Bush was not deterred by this history. He established principles for comprehensive Medicare reform but carved out a more targeted objective that was a direct outgrowth of a 2000 campaign pledge: a new prescription drug benefit under Medicare for expenses incurred outside of the hospital. In selecting this issue as an administration priority, Bush took a significant political risk. He was bound to offend his conservative base by proposing expansion of an already large and rapidly growing federal entitlement program. Yet success in Congress was bound to be difficult given the obstacles faced by any major piece of health care legislation. As Hillary Clinton discovered in 1993, any major health care proposal triggers complex negotiations among powerful commercial interests such as insurers, physicians, managed-care organizations, employers, labor unions, patient advocacy groups, and pharmaceutical manufacturers . And one of the most powerful groups on this issue, the American 5 Drug Coverage for Seniors 94 · Bush on the Home Front Association of Retired Persons (AARP), had built a long and trusting relationship with the Democratic Party. In a fascinating series of legislative developments, Bush worked the polarized Congress to accomplish the first major reform of Medicare since the program was created more than a generation ago. The legislation did not pass quickly. It was not until three years into Bush’s first term that Congress sent a bill to the Oval Office for the president’s signature. Once passed, the complex new law confronted major roadblocks during the implementation process. Early stumbles by the Department of Health and Human Services provided plenty of stories for reporters eager to identify flaws in the new program. Some conservatives called for suspension or repeal while some liberals called for a major overhaul of the new program just as it was beginning to take effect. Using a wide range of executive powers, from rule making to public communications , the White House and the Department of Health and Human Services overcame the immediate obstacles, increased public satisfaction with the program, and demonstrated that a market-oriented approach to drug coverage can work effectively. Why a New Drug Benefit Was Inevitable When the Medicare program was created in 1965, the pharmaceutical revolution was only beginning. The public had already experienced the benefits of powerful new antibiotics and antidepressants, but the role of drugs in medicine was perceived to be quite limited. In 1965 Americans spent about $3.7 billion on pharmaceuticals, less than 5 percent of health care spending.1 There was little impetus to extend Medicare coverage to drugs. Over the last forty years, there has been dramatic progress in the development of new therapies: vaccines to protect against childhood diseases, immunosuppressant drugs for organ transplant recipients, drugs to manage asthma, clot-busting and blood-thinning drugs, antidepressants with less severe side effects, and remarkable treatments that combat HIV/AIDS and other infectious diseases. Surgical advances and lifestyle changes have also been valuable, but progress against America’s largest killer, heart disease, has been aided by new drugs that control cholesterol levels, lower blood pressure, and combat irregular heartbeats. Drug Coverage for Seniors · 95 By the year 2000 drug expenditures in the USA had soared to over $100 billion . Policy makers in 2000 were told that these expenditures were expected to grow to over $240 billion by 2008.2 With more new drug breakthroughs based on gene therapy and biotechnology on the horizon, the only debate was about how fast drug expenditures would grow. If the pharmaceutical marketplace was growing so handsomely, why was legislation inevitable? The answer lies in the fragmented nature of the health insurance industry and the challenges that American businesses face remaining competitive in a global economy. In the fall of 1999, 38 percent of seniors and younger Medicare beneficiaries with disabilities had no insurance for drug coverage. A significant proportion of those uninsured were in rural areas (50%), near the poverty level (44%), and over the age of eighty-five (45%). The very poor, or at least those enrolled in the federal Medicaid program, had excellent drug coverage and few out-ofpocket expenses for drugs.3 The medication needs of the Medicare population are substantial. The average Medicare recipient had over twenty prescriptions in 1999. Those without insurance coverage had an average of eighteen prescriptions; those with coverage had an average of twenty...