By Arnold Kling
I have not been following the prescription drug benefit bill closely enough to be able to provide a sound economic analysis. According to the Washington Post, I am not alone.
This is an extremely expensive, 1,100-page bill that will have a profound effect on the nation’s fiscal and physical health. And although it was not finished until yesterday afternoon — after several months of a largely secret conference — last night House leaders were planning to bring it up for a vote today or tomorrow. If they do, most members will have no real idea of what they are voting for or against.
Both the Post and the Wall Street Journal editorially oppose the bill, with the Journal saying,
seniors with low drug expenses will be net losers under the GOP bill once they pay their premiums and deductible. Yet they will be pressured to sign up by stiff late enrollment penalties. Worse, many seniors will have their gold-plated private retiree coverage canceled, and end up with the inferior government benefit.
The legislation received a boost when it was endorsed by the American Association of Retired Persons. Paul Krugman thinks that this was motivated by rent-seeking.
Over the years AARP has become much more than an advocacy and service organization for older Americans. It receives more than $150 million each year in commissions on insurance, mutual funds and prescription drugs sold to its members.
And this Medicare bill is very friendly to insurance and drug companies.
My concern is that one of the policy alternatives that I would like to see on the table for Social Security and Medicare is raising the retirement age for people now aged 50 and younger. However, if the AARP earns income from retirees, then they would regard any reduction in the size of the retired population as a threat.
For Discussion. Is it reasonable to conjecture that the number of pages in the legislation and the amount of rent-seeking involved in its design are positively correlated?