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A Political Prescription

What's good for the elderly is good for Congressional and presidential candidates.

The slogan used to be "a chicken in every pot." This week, it became a pill in every medicine cabinet.

On Monday, the


administration declared that its long-awaited Medicare plan will pick up most of the tab for prescription medicine for the elderly. The elderly, coincidentally, are the most indispensable voters in congressional and presidential elections.

The exact plan will not be released until later this month, but already Washington is scrambling, motivated by flashbacks of

Ronald Reagan's

ill-fated catastrophic health care plan and Hillary's health care grab.

Before the bedlam was over with Reagan's 1987 plan, the chair of the House Ways and Means Committee,

Dan Rostenkowski

, was attacked in his car by old ladies behaving like they were Bloods and Senator Rosty was a wayward Crip driving on their turf. Hillary's attempts at price controls and the like still have some lobbyists shuddering.

The deadline for Medicare insolvency was recently moved back to 2015 by the bean-counters, thanks to the budget surplus, but the question remains how to pay for such largesse. Currently about 65% of disabled and elderly Medicare recipients get their drugs covered through former employer health plans or pay for private coverage called "Medigap." The

National Academy of Social Insurance

estimates that having Medicare pick up the tab for said drugs would increase costs by 7% to 13%, or $17.5 billion to $24 billion, in the first year.

The White House says it won't use price controls this time and that covering drugs will actually save money by reducing hospital stays and nursing home care. Most outside economists and industry analysts think that's somewhere between cute wishful thinking and cynical campaign rhetoric. The Office of Management and Budget has estimated that a prescription drug benefit would cost roughly $30 billion a year.

Indeed, some observers like Ed Haislmaier, president of Strategic Policy Management and a veteran of the Washington health care wars, expects the actual plan will offer little more substance than campaign bunting and straw hats. "Call me when they want to commit policy," he says.

Washington is never polite during a presidential election. But with a five-seat swing for control of the House, it has become downright ruthless. And the fight over Medicare may actually bring out the longest knives. It certainly did in 1996.

That's when the acronym M2E2 was coined. M2E2 is not a new

Federal Reserve

rate for the Euro - actually it might be for all I know. For sure, it is what political geeks called the Clinton-Gore strategy in 1996. It stood for "Medicare, Medicaid, Education and the Environment," which Democrats would defend against the ravenous


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Republicans' tax and spending cuts. The 2 Ms and 2 Es represented the coalition of interests necessary for a Democratic victory, according to polling by both parties, and Medicare was the most indispensible.

Al Gore

robotically promised to defend or save M2E2 seven times during his vice presidential debate against

Jack Kemp

. Gore and Clinton must have said it 10,000 times during that campaign.

But after the election, Medicare was thrown to a bipartisan commission headed by

Senator John Breax

, D.-LA, traditionally a Clinton ally. The Breaux plan, released this March, called for eventually raising eligibility to the age of 67 and transforming Medicare into a semiprivatized system, (similar to the insurance plans members of Congress get now). It had the backing of liberal and conservative Medicare experts, as well as many Republican and Democratic lawmakers.

But it would have effectively removed one of the big Ms from the 2000 campaign. So when President Clinton's four appointees refused to endorse the plan -- which consequently came up one vote short of the supermajority necessary for official recommendation to Congress -- few in Washington believed it was because of their staunch independence.

Now, what has many Republicans and health and pharmaceutical industry executives worried is the idea that Clinton may actually "commit policy" after all. His chief water-carrier on the Breaux commission was the former head of the Health Care Financing Administration (HCFA and pronounced HickFah by all the cool guys),

Bruce Vladeck

. Clinton owes Vladeck. And, according to someone who attended commission meetings, this week's White House trial balloons sound eerily similar to Mr. Vladeck's proposals.

While on the Breaux commission, Vladeck fought strenuously for what he called an "empowerment program." Vladeck wanted HCFA to achieve efficiency by being empowered to ration Medicare dollars exclusively to doctors of its choosing. Some compare giving this obscure -- and by most accounts inept -- agency such power the equivalent of throwing a drowning man a 50-pound weight.

President Clinton's plan would be "empowerment plus," as some are calling it, allowing HCFA to determine prices of drugs by cutting bulk-rate deals with HMOs and pharmacy benefit managers (PBMs). Under this system, HCFA would be "empowered" to corner the market and autonomously determine a fair price for drugs in many areas. Think of it as HCFA being the Pentagon of the health industry. Or imagine the Post Office telling




what they could charge and where they could operate. The White House calls this a "private sector" approach to cost cutting. Critics -- and they are legion -- think this a back door approach to monopsonistic price controls. Monopsony is a technical way to describe when a single purchaser controls the price of a product.

While odds are "about 90%" according to one Hill staffer, that the Clinton plan will resemble the Vladeck "empowerment" agenda, it is unclear whether the White House intends to push for a real piece of legislation or just a campaign issue. Either way, it is near certain that major Medicare reform will have to wait until after the election.

Jonah Goldberg is a contributing editor and a daily online columnist for the National Review. He can be reached at