Still Lowballing the Drug Benefit

Just in time for the Bush administration's latest estimate of the Medicare drug benefit's cost ($720 billion during its first 10 years), the Cato Institute yesterday published a paper arguing that the actual bill is apt to be even higher. Cato's Jagadeesh Gokhale and the American Enterprise Institute's Joseph Antos count the ways in which the government's projections could be off the mark:

The new drug plan may be less effective at containing costs than is assumed in making the estimates; more employers than expected may drop retiree drug coverage under their plans; newer drugs may be more expensive than assumed; more retirees may enroll in the drug program than assumed; enrollees may demand more drug treatments than assumed; physicians may begin prescribing more drugs to seniors than assumed; consolidation in the pharmaceutical industry may lead to less competition, greater monopoly power, and higher drug prices.

And that's assuming Congress does not give in to predictable demands for expanded coverage.