(Washington, D.C.)―In response to yesterday’s conference agreement on Medicare prescription drug legislation, the Council for Citizens Against Government Waste (CCAGW) sent the following open letter to the nation’s elderly:  

Dear Grandma and Grandpa:

I have good news and bad news.  The good news, according to some in Washington, is that Congress is about to pass a bill that will add a prescription drug benefit to Medicare.  The bad news is this bill fails to reform Medicare, a program that is headed toward bankruptcy.  It may take away prescription drug coverage that you and your friends already have.  Finally, it will stick your children and grandchildren with a massive financial burden.

Since Medicare was passed with good intentions in 1965, the program’s costs have exploded out of control.  At that time, Medicare was predicted to cost $26 billion in 2003; the actual cost is $245 billion.  Even before the ink is dry on the new bill, Congress has revised its cost prediction from $400 billion to around $430 billion.  Imagine what the cost will be 10 years from now!  Since there is already a $500 billion budget deficit predicted for this year, the only way to pay for the new benefit is to borrow that $430 billion, which transfers the costs onto your children and grandchildren.  Medicare’s unfunded liability currently hovers around $40 trillion.  Today’s politicians are raiding the paychecks of the unborn to impress senior citizens before the 2004 elections.

The fiscal damage could be reduced and the effectiveness of the drug benefit improved if coverage was targeted at low income seniors.  In fact, only 11 percent of the $430 billion will go to seniors who actually need the money.  The rest will replace money now being spent by state governments, employers, Medigap, and seniors themselves.

Even worse, the one-third of your fellow retirees who receive drug benefits through their former employer’s private systems could lose that coverage.  Of that number 37 percent, or four million seniors, will lose their benefits, pay 60 percent more out-of-pocket, and be herded into Medicare’s mismanaged system.

The so-called cost containment provisions will do little to block the tsunami of debt that will engulf the country.  The 28 percent subsidy to employers for retiree drug coverage will not stop companies from cutting benefits in a competitive economy.  Premium support, which would have forced the traditional Medicare program to compete with private health plans, was scaled back to a pilot program, which is doomed to failure.

Politicians are leading us into a fool’s paradise.  At a time when Congress should be making fundamental changes to the Medicare program, they have added a universal benefit that will disrupt existing coverage, causing Medicare to collapse under its own weight while passing the cost on to future generations.

Have a nice day anyway.

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.