A flawed drug benefit

ELDERLY PEOPLE puzzling over the Medicare drug benefit as enrollment opened last week should know there's a reason it is so complicated: The Republican leaders of Congress who crafted the plan are unsympathetic to social programs, and they loaded it up with special exceptions and limitations to further the goals in their political agenda.

Congress passed the law in 2003 to fulfill a campaign promise by President Bush three years earlier. The Republican leadership was careful to protect the interests of their allies in the drug industry. The program is being administered through private drug benefit managers who will compete with each other for business.

The US Department of Veterans Affairs, the Defense Department, Coast Guard, and Public Health Service have a more straightforward approach. They demand that drug companies give them a 24 percent discount off the average manufacturer's price. When drugs are similar, the departments invite competitive bids from manufacturers.

Direct purchasing ought to have been tried for the general Medicare population. But pharmaceutical companies are opposed to the federal government setting prices for such a large portion of their business. Congress opted instead to let private insurers establish prices in competition with each other. Health and Human Services Secretary Michael Leavitt said this week that prices offered by the plans in the first days of enrollment were 15 percent lower than his department expected. Maybe so, but they could have been lower still if the government had been able to wield its market power.

Then there's the ''doughnut hole," a gap in coverage that would force an enrollee to pay the full amount for drugs if costs fall into an uncovered no-man's land between $2,250 and $5,100. This $2,850 gap is ridiculous, but Congress was intent on saving money at the expense of reasonable coverage.

Even though this is the greatest expansion of Medicare since it was created in 1965, Republicans really want to limit the growth of the entire Medicare program. In this bill they attached incentives for insurance companies to set up Medicare managed-care plans. Republicans hope that this eventually will reduce spending, but for the present it will increase the cost of the drug benefit law and encourage people to join health plans that may not fit their needs.

With all its imperfections, the benefit will defray much of the cost of drugs for poor people, and it will provide help for those with high bills that exceed the doughnut hole. In the future, the benefit needs to be streamlined and improved by politicians who are sympathetic to its core purpose: to provide prescription drugs, simply and affordably, and to keep elderly people in good health.