By PAUL KRUGMAN
“Lots of things in life are complicated.” So declared Michael Leavitt, the secretary of health and human services, in response to the mass confusion as registration for the new Medicare drug benefit began. But the complexity of the program - which has reduced some retirees to tears as they try to make what may be life-or-death decisions - is far greater than necessary.
One reason the drug benefit is so confusing is that older Americans can’t simply sign up with Medicare, as they can for other benefits. They must, instead, choose from a baffling array of plans offered by private middlemen.
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But confusion isn’t the only, or even the main, reason why the privatization of drug benefits is bad for America. The real problem is that we’ll end up spending too much and getting too little.
Everything we know about health economics indicates that private drug plans will have much higher administrative costs than would have been incurred if Medicare had administered the benefit directly.
It’s also clear that the private plans will spend large sums on marketing rather than on medicine. I have nothing against Don Shula, the former head coach of the Miami Dolphins, who is promoting a drug plan offered by Humana. But do we really want people choosing drug plans based on which one hires the most persuasive celebrity?
Last but not least, competing private drug plans will have less clout in negotiating lower drug prices than Medicare as a whole would have. And the law explicitly forbids Medicare from intervening to help the private plans negotiate better deals.
Last week I explained that the Medicare drug bill was devised by people who don’t believe in a positive role for government. An insistence on gratuitous privatization is a byproduct of the same ideology. And the result of that ideology is a piece of legislation so bad it’s almost surreal.
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