Press Release

For Immediate ReleaseContact: Jim Campi
October 19, 1999(202) 467-5300


(WASHINGTON, DC.) Citizens Against Government Waste (CAGW) cautions seniors and taxpayers of  “Clintons bearing gifts” and warns them to greet the President’s Medicare reform measure, and the prescription drug benefit in particular, with a great deal of skepticism.  If adopted, the prescription drug benefit will be extremely costly and will desert seniors when they really need help.

“The president’s proposal does nothing to preserve Medicare for future retirees,” stated Thomas Schatz, president of Citizens Against Government Waste.  “The President states he wants to dedicate 15% of the current budget surplus, $794 billion, to strengthening the Medicare trust fund.  This action will only delay the inevitable until a majority of baby boomers have retired.  Even worse, it relies on a maybe.  There have been recessions before; there will be recessions again.  To depend on an anticipated surplus to shore up a program that millions of seniors count on is foolhardy, at best.”

“Medicare is already in financial trouble but the president wants to make it worse by adding a government-run prescription drug program,” Schatz continued.  “He states his drug benefit will cost $118 million over 10 years, but the Congressional Budget Office says it will cost far more -- $168.2 billion.  Most of this cost will be born by the children and grandchildren of Medicare beneficiaries and cutbacks in current Medicare expenditures.” 

“Of the 34 million senior citizens currently in Medicare, two-thirds have some sort of drug coverage, either through a Medigap program, an employer-sponsored retiree health plan, a Medicare managed care plan, or Medicaid.  That leaves approximately one-third of seniors without a drug benefit.  CAGW thinks it would be better to concentrate on the minority of seniors that do not have an insurance policy for prescription drugs then to design a new program and a new bureaucracy that will cost younger taxpayers billions of dollars,” stated Schatz.

The President’s plan is a “Siren’s Song.”  It would offer a drug benefit with no deductible starting at $25.20 per month in 2002, slowly rising to $52.90 per month six years later.  The initial low price will encourage a majority of seniors to leave their private plan and sign up for the government-run plan.  This will eventually destroy private insurance coverage for seniors’ drugs.  Once the private sector is eliminated, seniors will be at the mercy of politicians and federal bureaucrats for their drugs.  Since the government would only pay half of the cost of prescription drugs up to a cap, seniors that are most in need would not be helped.  In other words, if a senior used $5,000 worth of drugs in 2008, the government’s contribution would stop at $2,500.  The premium for that person would also be $634.80 that year, meaning he or she would essentially pay $3,134.80 for only $2,500 in Medicare coverage!  Keep in mind this amount does not include what the senior would be paying for Medicare Part B.

“Congress and the President need to look at better ways to help more seniors get access to prescription drug coverage,” stated Schatz.  “One way is to adopt the reform model that was supported by a majority of members on the National Bipartisan Commission on the Future of Medicare.  Another way is to reform Medigap policies.  Medigap policies should be allowed to be far more creative and flexible in their design of benefits then they are today.  These two measures would do more to help seniors now, and in the future, than any government-run plan designed by President Clinton,” concluded Schatz.

CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.



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