Paul Krugman: D is for Debacle

Paul Krugman on Medicare, Part D and the problems faced by those who were and are confused by a confusing program:

D for Debacle, by Paul Krugman, Commentary, NY Times: Today is the last day to sign up for Medicare Part D, the prescription drug benefit. It appears that millions of Americans, confused by the array of competing plans or simply unaware of the cutoff date, will miss the deadline. This will leave them without drug coverage for the rest of the year, and subject to financial penalties for the rest of their lives.

President Bush refuses to extend the sign-up period. "Deadlines," he said last week, "help people understand there's finality, and people need to get after it, you know?" His real objection to extending the deadline is probably that this would be an implicit admission that his administration botched the program's start-up. And Mr. Bush never, ever admits mistakes...

Even Mr. Bush has acknowledged that signing up for the program is a confusing process. But ... prescription drug coverage didn't have to be bafflingly complex. Drug coverage could simply have been added to traditional Medicare. If the government had done that, everyone currently covered by Medicare would automatically have been enrolled in the drug benefit.

Adding drug coverage as part of ordinary Medicare would also have saved a lot of money, both by eliminating the cost of employing private insurance companies as middlemen and by allowing the government to negotiate lower drug prices. This would have made it possible to offer a better benefit at much less cost to taxpayers.

But while a straightforward addition of drug coverage to Medicare would have been good policy, it would have been bad politics from the point of view of conservatives, who want to privatize traditional social insurance programs, not make them better.

Moreover, administration officials and their allies in Congress had both political and personal incentives not to do anything that might reduce the profits of insurance and drug companies. Both the insurance industry and, especially, the pharmaceutical industry are major campaign contributors. And soon after the drug bill was passed, the congressman and the administration official most responsible for drafting the legislation both left public service to become lobbyists.

So what we got was a drug program set up to serve the administration's friends and its political agenda, not the alleged beneficiaries. Instead of providing drug coverage directly, Part D is a complex system of subsidies to private insurance companies. The administration's insistence on running the program through these companies, which provide little if any additional value beyond what Medicare could easily have provided directly, is what makes the whole thing so complicated. And that complication, combined with an obvious lack of interest in making the system work, is what led to the disastrous start-up.

All of this is, alas, terribly familiar. As John DiIulio, the former head of Mr. Bush's faith-based initiative, told Esquire, "What you've got is everything — and I mean everything — being run by the political arm." Ideology and cronyism take complete precedence over the business of governing.

And that's why when it comes to actual policy as opposed to politics, the Bush administration has turned out to have the reverse Midas touch. Everything it gets its hands on, from the reconstruction of Iraq to the rescue of New Orleans, from the drug benefit to the reform of the C.I.A., turns to crud.

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