We have been hearing for years about economic fallout that will surely result from the coming social security binge, but few could have anticipated the real threat baby boomers represent. Not content to suck resources from a dying system, the Me Generation has formed a massive voting bloc willing to grant itself one-size-fits all benefits. Last month, in an orgy of self-love, the 108th congress (average age: 55) helped itself to the one resource younger generations will always be good for: future earnings.
House and Senate versions of legislation that would add prescription drug benefits to Medicare are now being reconciled in committee. Since both bills will create a massively expensive drug benefit, and President Bush (57 on Sunday; Happy Birthday!) promised the same treat in his State of the Union address, a universal Medicare drug benefit is the surest thing Washington has seen since Dick Cheney's last heart attack.
Every great legislative push needs its welfare queen, and this time around the subject is a hypothetical elderly widow, forced to decide between food and pharmaceuticals. She exists, surely; the small segment of the population too wealthy for Medicaid yet too poor to make ends meet is more than a trick of rhetoric. Unfortunately, she is being used to extort benefits for everyone over 65, the vast majority of whom don't need them, many of whom are active voters. The elderly are easily the wealthiest segment of society, with a poverty rate little more than half that of the under 18-set who will help foot the bill.
While there is bi-partisan support for drug benefits, no one is happy with the bills currently being discussed in committee. Democrats claim this is all a veiled attempt to privatize, Republicans warn of a slippery slope to socialization. But everyone can agree that it will be enormously expensive. The administration is projecting $400 billion over the next ten years, a number that appears to be rooted in thin air. Scholars at the American Enterprise Institute note that the number fails to anticipate even the obvious—that baby boomers will soon be swamping the system of entitlements. Regardless, the very practice of estimating future medical costs is suspect. In 1966, when Medicare was introduced, The House Ways and Means committee estimated that in the far off year of 1990 costs would reach $12 billion. By 1990, costs topped $107 billion. The speed with which scientists are developing new medical technologies has only increased. Slapping a price tag on as-yet undiscovered medicines is a fool's game, but congress seems eager to play.
Unsurprisingly, the benefit isn't even generous. A $400 billion cake split 40 million ways, with a massive serving for bureaucratic administration, leaves little for our indigent widow. She'll have to pay a $35 monthly fee, a $275 deductible, and deal with spotty partial coverage after that. And those with more generous retirement benefits may actually lose them, as employee-sponsored plans try to foist responsibility onto the government.
The whole debacle is a botched attempt at modernization by the administration. Originally, Bush hoped to introduce drug benefits as a segue to comprehensive Medicare reform, introducing greater competition and market forces. Benefits would have been used to soften the transition from Medicare to private sector plans. What has emerged, however, offers no incentive to switch to private plans, and little incentive for private plans to try competing. A Washington Post article notes that "not one company has said publicly that it would sign up for either of these new marriages with Medicare."
This is the top-down, technocratic bureaucracy of another age. This vision, with its predilection toward unrealistic prediction and fear of market forces, is more fitting to a world of walls and stasis than global markets and flexibility. Baby boomers want to be taken care of in the antiquated ways of their formative years rather than embrace a system that encourages choice and innovation. The biggest expansion of Medicare since its inception follows the third largest tax cut in U.S. history, giving new meaning to the term "compassionate conservatism." But if the baby boomers are leaving the younger generations with a huge bill to pay, at least they've also provided some sage advice: Never trust anybody over 30.