Your tax dollars at work (not theirs)The New York Times reports today that, according to government estimates, over one third of all retirees with employee-sponsored prescription drug benefits will lose those benefits when Medicare begins to offer similar coverage in 2006.
In order to encourage employers to continue providing coverage, the federal government is offering tax-free subsidies to companies who can show that their coverage is “as generous” as Medicare. Of course, as the article also notes, the typical employer-sponsored plans currently is more generous than Medicare, which has a built-in “deductible” of out-of-pocket expenses before coverage kicks in.
One way to look at this is to say that the government is ensuring a minimum level of prescription drug care for all retirees, by subsidizing employers to “match” Medicare benefits. A more realistic way to look at it, however, is as a government-funded “race to the bottom”.
Companies (particularly big companies) that were providing prescription benefits to their retirees greater than those provided by Medicare will want to take advantage of the subsidies and tax benefits. If they can do so while reducing the amount they pay for retiree prescription coverage, so much the better.
There also is no incentive for companies (i.e., smaller companies who do not benefit nearly as much as big ones from the tax cuts and other policies of this administration) forced to reduce their benefits below what Medicare offers to attempt at least to supplement or complement Medicare:
Employers who curtail drug benefits could still try to help retirees by offering drug coverage to supplement or complement what Medicare offers. But the government would not subsidize such assistance.
According to DHHS figures cited in the article, 11.5 million retirees who would otherwise have received prescription benefits from employer-sponsored plans will now get their coverage either from Medicare directly or from government-subsidized plans.
It would seem, then, that the new Medicare regulation will have two primary effects: where employers had been providing benefits not equal to those of Medicare, there will be no incentive to continue providing such benefits: their retirees will be better off on Medicare, and they will be better off not paying for coverage. Where employers already had been providing benefits greater than those of Medicare, the government will now pay them to do so—even if they reduce those benefits.
It should surprise no-one that the benefit of the new Medicare laws inures primarily to the benefit of large corporations, while screwing both a large segment of the retiree community and the embattled taxpayers, who will bear a far greater share of supporting our growing elderly population. An inevitable collateral effect of this legislation will be the drafting of additional rules and regulations to govern Medicare subsidies, and (if any of this is to function properly) the expansion of the HSS bureaucracy.
What should surprise, even shock (and not just in the Captain Renault sense of that word) some people, is that this law—which increases government spending, grows the federal bureaucracy, further entangles the federal government in our private lives, and smacks of socialized medicine—is one of the “great achievements” of a purportedly “Republican” administration.
The crowning irony: in order to keep prescription drug costs down, the House just voted to allow Americans to import prescription drugs from other countries.
They can’t blame this one on the terrorists (can they?), so how do they justify such a gross departure from the fundamental tenets of their party? Perhaps more importantly, how does the party justify its continued support of these curs?
Read Less...
