3 Big Differences—and 1 Awful Similarity—Between Obamacare and Medicare Part D


Keith Speights at The Motley Fool outlines "3 Huge Differences Between the Medicare Part D and Obamacare Launches." As most of us have been lectured by admin officials and supporters of the president's health plan, don't you know that the prescription drug plan rolled out by the Bush administration in the mid-Aughts also had a terrible launch? And now, would you believe it, the seniors who get nearly free drugs from Part D love the program!

It sure did, but Speights stresses that the sheer magnitude of the technical difficulties, the centrality of the website to the program's success, and the incentives for the targeted audience to sign up are very different this time around. Read the whole article for details, but on that last point:

Medicare Part D launched with several incentives for seniors to enroll: new benefits they didn't have before, low premiums, and subsidies for individuals with low incomes. There was even a penalty for enrolling late—although none for declining to enroll.

Similar incentives are also present with Obamacare. A big difference, though, is that many individuals could find it more financially attractive to forgo insurance — especially in the first year or two. And because the health-reform legislation didn't give the IRS any real teeth to go after those who don't want to pay the penalties, the "stick" of Obamacare probably won't look too threatening to some Americans not enticed by the "carrot" of health insurance.

Let me add one striking—and awful -similarity to the two programs: They are both unnecessary and expensive. 

There's no question that recipients of drugs under Medicare Part D love the program. Something like nine out of 10 seniors say so. Why wouldn't they? They got $62 billion of free and/or reduced-price drugs under the program in 2010 and that number will bounce up to $150 billion annually by 2019! Billion! None of which was paid for by any sort of dedicated revenue stream at the time of the legislation's passage. You, me, and our great-grandkids are the stream! No wonder it feels like it's raining!

And before anyone starts yammering on about Medicare Part D being the only thing standing between seniors choosing between Purina Cat Chow and a generic statin (as folks such as Al Gore did back in the 2000 campaign), remember that when the plan was being discussed, retirees paid on average a total of 3.2 percent of their annual income on drugs. That was less than they shelled out on entertainment.

Rather than, I don't know, creating a smaller, targeted plan that might cover low-income/low-wealth seniors and other poor people regardless of age, Republicans and Democrats came up with a sop to one of the most powerful and wealthy voting blocs in the country. Many Democrats voted against the prescription drug plan because it wasn't paid for, which at least was to their credit at the time.

But it's an appalling spectacle to see both parties now touting a giveaway that wasn't necessary in the first place and whose cost will more than double in less than a decade as some sort of model of anything except stupidity and wastefulness in action.

Which brings us to Obamacare, whose cost estimate for its first full decade doubled even before this awful Healtcare.gov apparition appeared. As Peter Suderman noted in 2012, the Congressional Budget Office figures that instead of boasting a gross operating cost of just (!) $938 billion for its first decade, the tab for the first decade of actual coverage is looking closer to $1.76 trillion. Who would have thought that a government health care plan might have been more expensive than originally claimed? Only anyone who actually tracks what past reforms ended up costing.

Then there's Obamacare's great failure when it comes to insuring the uninsured (let's leave aside the question of whether insurance, spending on health care, and actual health outcomes are clearly related, which they are not). Of the 50 million folks that don't have insurance, Obamacare will, under its most optimistic projections cover an additional 25 million over the next decade. And it will leave 31 million uninsured over the same time frame.

When it comes to universal coverage, then, Obamacare is an-out-of-the-box failure that needs to go back into the box and stay there. Then we might start a conversation about what insurance is actually to supposed to do and build a consensus around how best to design a law that might actually work and doesn't just massively increase government's power and spending to no clear end.

15-second video, starring Barack Obama, Kathleen Sebelius, and Mr. T: Time to bring in the A-Team? It's always time to bring in The A-Team.