Medicare Steamroller

In a few short days, the promise of a Medicare drug benefit has been transformed from a political football into a steamroller. With both Democrats and Republicans now in agreement, passage of legislation in both the House and Senate now appears likely before July 4.

The Senate Finance Committee is meeting today to consider the Medicare prescription drug plan that Republican Chairman Chuck Grassley and Ranking Democrat Max Baucus have forged. At least 138 potential amendments have been filed so details aren't yet final.

But several things are clear:

• The bill is based upon bad policy. Grassley and Baucus insisted that those on traditional Medicare must get a drug benefit equal to those joining the new market-based option. That violates President Bush's important principle - which the entire free-market policy community supports - that a new drug benefit should be a carrot to encourage seniors to join modern health plans that can provide better benefits.

• Lawmakers made themselves insurance actuaries and wrote up the free-standing drug policy. Not surprisingly, it's complicated and not senior-friendly. Nonetheless, at least two private drug plans must agree to offer this coverage in each region. If they don't, the government would offer a fallback plan. This fallback is straight from the Kennedy-Daschle playbook - a government-run drug benefit that's run much like the rest of Medicare - with government inevitably fixing prices and deciding what drugs will be covered.

• For seniors hoping the new market-based plans will be an option, they should note they will be paid based upon the flawed fixed government payment system that has driven Medicare HMOs out of business and is forcing more and more doctors to refuse to see patients on traditional Medicare.

• The requirement that the government pick the ?three lowest bidders? in a region turns health care into a bargain-basement commodity.