By Patricia Barry
November 2002

	AARP's Election Guide 2002 Plan-by-Plan List of Pharmacy Assistance Programs

Then as now, there were major rifts on whether the federal government should get into a costly new entitlement program—yet, if Congress went ahead, both parties wanted to take credit for it.

"Deep divisions concerning the proper role of government were at the root of the controversy over Medicare in the first place," Marmor says. "And I think they're at the root of different views on how to do prescription drugs at present."

The Medicare logjam was broken mostly by the Democratic landslide of 1964. But for a time the issue remained stuck between two proposals that represented the differing philosophies of Democratic conservatives and liberals. It was a conservative, Rep. Wilbur Mills of Arkansas, who found the solution: He suggested combining the two.

There is a parallel here in recent attempts to achieve a last-minute compromise in the Senate. That deal proposed combining the Republicans' desire for Medicare drug coverage through private insurance plans with a "fallback" program run directly by Medicare, which is most Democrats' preference.

This dual system would cover beneficiaries even if insurers failed to offer plans in some areas or later withdrew. It would also test opposing philosophical assumptions on which delivery system works best.

But no modern Wilbur Mills has yet pulled that deal off—and no pollster expects a Nov. 5 landslide by either party.

THE PAST SHAPES DEBATE NOW
Ironically, the 1965 Medicare proposal included prescription drug coverage—belying today's conventional wisdom that drugs were not considered important to health care back then. The provision was dropped at the last minute, Marmor points out, because of "unpredictable and potentially high costs."

From 1969 to 1972, the Nixon administration also seriously considered adding a drug benefit to Medicare. Instead, because of growing health care cost inflation at the time, it opted to regulate drug prices in Medicaid, the federal-state health program for the poor.

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That alerted drugmakers to the threat of price regulation in Medicare, says Thomas Oliver, associate professor at the Bloomberg School of Public Health at Johns Hopkins University. Today, he says, "they can see that a drug benefit—even if it's not accompanied with price controls at the start—will eventually have those controls" because, if costs rise unchecked, ultimately the government "has to protect its budget."

The third near miss for Medicare drug coverage also helped shape the later debate. That time, in 1988, a benefit was included in a law to protect beneficiaries from catastrophic out-of-pocket costs. It was repealed a year later under pressure from the drug industry and some high-income beneficiaries who objected to compulsory premiums.

That debacle, Oliver says, means that everyone now believes a benefit must be voluntary. And this poses a conundrum that Congress so far has not solved: how to make a benefit that won't break the budget regulation but attracts enough participants to spread the risk around.

That is why the proposed pricetag of $350 billion to $400 billion over 10 years—huge as it seems—has proved a stumbling block. "It is virtually impossible to provide a significant benefit within those dollar constraints," says Stanley Wallack, director of the Schneider Institute for Health Policy at Brandeis University.

NEEDS, PRESSURES WON'T STOP
Whatever the obstacles, few analysts believe that the present drug issue will fade as it did in the '60s, '70s and '80s. Drugs are now central to treatment, and how to pay for them is of huge concern to employers, health insurers and the states, as well as to older Americans.

Millions of younger Americans also look to the future and wonder how they will fare under Medicare after years of drug coverage by employer health plans that may not continue into retirement. To them in particular, says Wallack, "to have a Medicare program without a drug benefit just doesn't make sense."

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