Articles

The Return of the Mediscare-mongers

April 03, 2013

The midterm election is still 19 months away, but for some it's never too early for demagoguery. And so this week the Democratic Congressional Campaign Committee launched a new "Mediscare" ad. The targets are 17 Republican congressmen who supported the House budget framework that includes Medicare reforms.

The ad has menacing music, doomsday predictions and a tagline that these GOP congressmen voted for "a radical vision for America" that guts Medicare. The spot is deceitful but still deserves a swift, powerful rebuttal. Even a deeply dishonest attack on Medicare, if unrefuted, can do damage.

There's also an important upside to fighting back effectively. It will not only increase the likelihood of these Republicans surviving similar assaults in the months ahead. It can also undermine the Democrats' credibility on the issue, deepen support for Medicare reform, and burnish Republican credentials for bipartisanship and practical leadership.

Here's how Republicans might pull off a successful counterpunch. When attacked, they can say that the GOP's budget framework adopted a proposal from the Medicare reform commission of a Democratic president (Bill Clinton) and introduced by a Democratic senator (John Breaux of Louisiana). More important, that proposal—premium support—has been successfully tested for almost a decade.

The GOP proposal to reform Medicare puts consumers in charge by relying on competition and choice instead of centralized government planning and price controls. It was the organizing principle of the successful Medicare Part D prescription drug benefit passed in 2003.

Here's how premium support works. Seniors who participate in Medicare Part D choose among drug coverage plans offered by competing private insurers. The federal government helps them pay for this coverage. The amount of support is a weighted average of the premiums charged by plans in the part of the country where they live.

If seniors want a more-expensive plan, they pay the difference. If they pick a less-expensive plan, then more of its cost is covered by government's premium support. But requiring seniors to pay at least part of the premium encourages them to shop for value when comparing plans and to use generic drugs where possible.

Medicare Part D has been in operation for eight years, and the results are extraordinary. In 2003, the Congressional Budget Office projected Part D's cost for its first decade would be $552 billion. The actual cost will be around $358 billion, 35% less than forecast and 64% less than the $1 trillion cost that the CBO estimated for the competing Democratic plan, in which the federal government would decide who got what drugs when and at what price.

The average premium for drug coverage is $30 a month, half what the actuaries estimated it would be this year. A 2011 study in the Journal of the American Medical Association found that the prescription benefit helped reduce hospital stays and delay the need for nursing care, saving Medicare $12 billion a year. The Congressional Budget Office also reported last November that seniors "had fewer hospitalizations and used fewer medical services as a result" of participating in Part D.

This hasn't kept the Obama administration from trying to undermine the drug benefit's market-centered approach. ObamaCare changed Part D by raising the government's contribution to some groups of beneficiaries, which will reduce their incentives to shop around or use generic drugs. Another proposal floated by the Obama administration would essentially levy a tax on pharmaceutical manufacturers that they would pass on in higher drug prices and thus higher premiums for seniors enrolled in Part D.

Republicans shouldn't shrink from discussing Medicare reform. They have a great story to tell. Republican politicians will have to tell it, but they'll have plenty of help. Many seniors will eagerly share their good experience and high opinion of the Medicare prescription drug program.

A thorough airing of Part D's approach and success will allow GOP candidates to refute "Mediscare" attacks by making this simple argument: If premium support works for prescription drug coverage, it will work for all of Medicare and keep Medicare itself from going broke. Republicans can prove this is possible because Medicare Part D is an actual success.

Democrats are relying on scare tactics and overplaying their hand. Republicans can rely on real reform, real success and real life to turn back this attack to their advantage.

A version of this article appeared April 4, 2013, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: The Return of the Mediscare-mongers and online at WSJ.com.

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