GOVERNMENT-PROVIDED PRESCRIPTION-DRUG COVERAGE

A Polemic by Barry D. Friedman, Ph.D., and a Response by Toni O. Barnett, Ph.D.

Copyright 2001 by Barry D. Friedman and Toni O. Barnett

AN APPEAL FOR PERSONAL RESPONSIBILITY by Dr. Friedman

For many years, representatives of the population of elderly American citizens have clamored for the national government to subsidize some part of the cost of prescription drugs for this population. I recall, sometime around 1980, a radio public-service announcement (PSA) in which voices of elderly individuals complained about the choice that they frequently made about purchasing either "medicine or food." The announcer’s voice intoned that these people were no longer going to tolerate this "medicine-or-food" situation. Whatever militant threat the PSA was supposedly warning us about never seemed to materialize. However, in the 2000 presidential campaign, both major-party nominees made reference to plans that they had to subsidize prescription drugs through the Medicare program. So, 20 years after the PSA that I heard, it seems that the "medicine-or-food" decision is about to be addressed in the public-policy arena.

For many years, I have been attentive to the arguments that the medical costs borne by elderly Americans are a threat to their standard of living. And the costs are substantial. Medical science has figured out how to keep the substantial majority of the population alive to ripe old ages. But this feat comes with these costs:

< The treatments that ward off death when people are in their 40s, 50s, or 60s--ages at which people once routinely died--and thus give people their "second lifetime" into their 70s, 80s, or 90s--such as quadruple-bypass surgery, colon-cancer surgery, and so forth--are often extremely expensive.

< Modern medical tests, which are extremely precise and sensitive, are able to detect conditions that are precursors to eventual illnesses--illnesses that previously would not have been detected until they had progressed beyond the point of being treatable. At that point, therapies and drugs are administered, involving costs that would not have been sustained if the tests had not sounded an early-warning alarm.

< People who then live into their 70s, 80s, or 90s--ages during which conditions such as high blood pressure, high cholesterol, etc., are routine facts of life--require expensive therapies and drugs to ward off the normal conditions of old age that carry with them risk of death. Furthermore, the incidence of such diseases as prostate cancer and Alzheimer’s disease increases stratospherically as people approach their 100^th birthday. There is hardly a single 90-year-old man alive who does not have (or has not had) cancer of the prostate.

< The infirmities of old age frequently advance to the point that relatives are unable to provide the care that Grandpa’s or Grandma’s condition requires; therefore, many elderly people are placed in convalescent/nursing homes, with all of the associated costs.

Thus, representatives of elderly Americans have been calling on the government to place the problem of expensive medical costs on the agenda of public policy. Another group of claimants consists of the children of elderly Americans who watch their aged parents’ nest eggs become consumed by such costs as the cost of long-term-facility care. These children, along with their parents, are disappointed when Grandpa’s and Grandma’s house has to be sold and their stocks and certificates of deposit have to be liquidated to raise funds to pay for the medical care, because these assets were intended to be the inheritance of the children and grandchildren.

But this author contends that the claim that aging Americans who encounter the entirely predictable costs of old-age medical care should be "held harmless"--i.e., that the government should intervene to ensure that their wealth is unaffected by their need for medical care--is highly questionable and ought to be challenged. If Grandpa Smith accumulates $100,000 in prescription-drug and long-term-facility costs after the Central City Hospital cures him and gives him 20 more years of life, it is not the responsibility of 30-year-old Sally down the street to pay more taxes so that Grandpa Smith, once he recovers, still has enough money to buy an RV and take Grandma Smith on that across-the-country tour of the United States that they’ve always dreamed about. If Grandpa Smith had wanted to be sure that he could afford the RV and the travel, then he should have either purchased a sufficient amount of health-care and long-term-facility insurance, or he should have effectively "insured himself" through an aggressive savings program. But to demand that 30-year-old Sally down the street should pay more taxes to guarantee Grandpa Smith the lifestyle that he prefers is to discard any notion of the concept of personal responsibility.

Besides, this transfer of wealth is, inevitably, a pyramid scheme that relies on the existence of a sufficient number of young Sally-type people who can give up a larger part of their income to pay for Grandpa Smith’s medical expenses and still pay for their own food, clothing, and shelter. As the population of older people continues to increase, the demands on Sally and the other members of her age cohort to pay for Grandpa Smith will eventually make it difficult for Sally to afford her food and medicine. The pyramid will collapse, because these transfers of wealth cannot and will not create more wealth. Somebody will suffer; I guarantee it. Confiscating the income of young people trying to establish themselves, raise children, afford their first homes, and so forth, leads us nowhere except to a society that is less prosperous because younger workers see little promise in the ethos of hard work, and, in the extreme, leads us to inter-generational warfare.

The economic reality of "scarce resources" says, sadly, that none of us has as much wealth as we would like to have. If you visit my home, you will notice that I do not have the spacious brick house with a basement that I always dreamed about. If you inspect my blue subcompact Toyota Tercel, you will notice that it isn’t the Camry that I would have preferred when I replaced my previous, 11-year-old Tercel in 1992. And, gosh, I might be able to afford the larger house and the more luxurious vehicle if I didn’t pay for life insurance, accidental-death-and-dismemberment insurance, in-hospital insurance, cancer-expense insurance, and long-term-facility insurance month after month (not to mention the part of my employer-provided health and disability insurance premiums that is deducted from my monthly pay check). How nice it would be if I could ditch all of these insurance policies, spend the money on things that would bring me gratification, and await the government’s and society’s intervention when I become sick or am injured or--in the context of providing for my wife--die. And is that what our society wants: a national government that teaches us that someone else is responsible for providing for our needs during our "golden years"?

Do you know of any 25-year-old or 30-year-old or 35-year-old person who doesn’t know how to have fun with every penny of his or her pay check? And, really, aren’t these the ages when people are healthy and energetic, so that they really could have fun with every penny of their pay checks? When financial planners and brokerage houses and Clark Howard appeal to young folks to put money into insurance policies and IRAs, perhaps we should denounce them for cruelly putting a crimp into the lifestyle of young people.

Let me anticipate this question that some may want to ask me: What about older people who have run out of money, and can’t pay for prescription drugs or other health-care needs? Would I leave them to die in their homes or--if they lose their homes--on the street? Generally, my answer is that I would not leave them to die in their homes or on the street. Instead, my inclination would be to provide for their basic needs through the welfare and Medicaid system. The next question would have to do with the level of service that I would want to provide. In all honesty, I tried to answer that question during our Learning Community on "Health Care, Public Policy, and Ethics" during the fall semester of 2000. In my essay on "Policy and Economics of the Health-Care System," I referred, again, to "scarce resources" as a reality that eventually sets a limit on how much health care to which any one individual is entitled, at public expense, as a matter of public policy. Space and time constraints prevent me, in this essay, from addressing whether every indigent individual is entitled to quadruple-bypass surgery, a heart transplant, or other extensive and even radical medical treatments; many pages of agonized thought would be necessary to resolve such a difficult policy question.

Perhaps, in fact, the national government really ought to broaden Social Security and Medicare to include prescription drugs, long-term-facility care, and, while we’re at it, losses of income due to illness or injury, and every other loss related to physical infirmity. If that is what the government is going to do, I wish that it would get it over with, so that I can cancel my plethora of insurance policies and move to the beautiful brick house with a basement that I could now afford. What has been developed at this point is a two-pronged system, where one segment of the population is saving and insuring itself at substantial postponement and/or sacrifice of gratification, and the other segment spends every dollar that it earns and waits for society to put out the safety net a few decades from now. Advocacy groups have asserted that it "isn’t fair" that elderly Americans should choose between medicine and food and, although they don’t put it that way, that they choose between medical treatments and across-the-country travel in RVs. Personally, I think that it "isn’t fair" that the responsible segment of society is deprived of the opportunity to enjoy its earnings if, eventually, the government is going to subsidize those who decided to spend today and go on the dole tomorrow.

A RESPONSE TO DR. FRIEDMAN by Dr. Barnett

Before I identify the points of Dr. Friedman’s "Appeal For Personal Responsibility" with which I disagree, I would first like to provide some information about how health care financing has evolved in the United States:

1. In the 19^th century, individuals paid health-care providers in cash or through the barter system; however, there were much fewer treatments. Private insurance evolved due to the inadequacy of this method.
   
2. Private insurance, either individual or employment-based, provided protection against unpredictable health-care expenses. This system, however, resulted in increased health-care costs by providers and made health care even less affordable by individuals who did not have insurance.
   
3. Government financing of health care was an attempt to solve this problem but only resulted in greater inflation in health-care costs. By the 1990s a health care crisis was evident which was characterized by inadequate access for some and high costs for everyone.
   
4. Managed-care organizations have increased their profits by denying services. These companies have primarily resulted in extremely expensive administrative costs.

I agree with this statement: "Despite the recent upheavals in health, one fundamental truth remains: The U. S. still has the least universal, most costly health care system in the industrialized world" (Bodenheimer and Grumbach, 1998, p. 5).

One of the basic premises that affects one’s thoughts related to financing of health care is whether one believes that health care is a "right" or a "privilege." As a health-care provider, I believe that health care is a "right" in a country such as the United States. There are numerous barriers to health care, such as:

1. Lack of health insurance. The number of uninsured individuals has grown significantly since 1976 because the number of employment-based insurance programs fell by several million. Many of the currently uninsured are employed or dependents of the employed. Insurance coverage has declined since the 1980s for these reasons:

1. There has been a major transition of the nation’s economy in the last two decades with a shift toward more low-wage, part-time, nonunionized service and clerical workers as well as downsizing in many major companies.
   
2. The high cost of health insurance has made it unaffordable by many businesses and individuals.
   
3. Administrative costs and experience ratings of insurance companies have made it unaffordable for many.

2. Lack of access to health care. A 1992 study by the U. S. Congress’s Office of Technology Assessment found that people lacking health insurance received less care and had worse health outcomes. The uninsured are less likely to have a regular source of health care and are more likely to report delays in receiving treatment. Many people assume that uninsured individuals receive hospital care through charity when, in fact, adults who are insured receive 90 percent more hospital services than the uninsured. In 1992, 67 percent of the uninsured reported postponing health care and 19 percent had been refused health care due to inability to pay.
   
3. The uninsured have worse health outcomes than those with insurance since they delay seeking health care due to lack of insurance.
   
4. Many individuals with insurance are actually underinsured because they have insurance that does not cover catastrophic expenses.
   
5. There are "Gaps in Medicare Coverage":

1. Medicare covers only 45 percent of the medical expenses of the elderly.
   
2. Medicare pays only 9 percent of the elderly’s nursing-home bills. Elderly patients qualify for Medicaid only after becoming impoverished.

   6. Poorer health is also related to income and race. I have difficulty with the idea that a person who is poor or a member of a minority group has less of a right to health care (Bodenheimer and Grumbach, 1999).

I do understand some of Dr. Friedman’s concerns related to elderly health care. We do know that a large percentage of health-care dollars are spent on individuals in their last month of life. Possibly there need to be some regulations related to the health care that is provided when someone is terminal. However, until this is done, most health-care providers will provide all of the available health care due to the liability and potential lawsuits by family members if they do not. There are also those unethical health-care providers who will take advantage of the health-care system by performing unnecessary and unbeneficial procedures.

In response to Dr. Friedman’s concerns about prescription-drug expenses for elderly patients and who is to pay for this: Medicare does not cover outpatient prescription-drug costs and they are a major source of out-of-pocket expenditures for the elderly. More than half of the elderly population does not have insurance coverage for prescription drugs at a point in their life when most are taking more medications than they ever have. According to RAND (1999), 67 percent of prescription-drug costs for elderly patients was paid out of pocket as of 1990 and is probably even higher now. The financial burden for lower-income individual is three times that of middle-income elderly people and sometimes ten times that of high-income elderly because the probability of having insurance coverage for prescription drugs increases with income.

From my own personal experience working in an indigent clinic in a small town in North Georgia, I would like to describe the typical elderly client. Most have worked all of their lives at jobs such as chicken plant, lumber, mechanic, etc., which provided little or no retirement benefit. They do have their social-security income (small as it is) and most own their homes. Many have numerous chronic health problems such as diabetes, hypertension, and hypercholesterolemia, which are usually genetic rather than just due to aging. These individuals often cannot afford their medications and sometimes we are able to get them on an indigent drug plan where they can get their medications at a discount. None of them whom I know even takes a vacation much less owns an RV as Dr. Friedman described.

What are the answers? I do not know!! While I do believe that individuals need to pay for their health care if they can afford it, I do not think that it is beneficial to make a family destitute and lose their home before they can qualify for any benefits. I will be interested to read your opinions.

References

Bodenheimer, T.S., and Grumbach, K. (1998). Understanding health policy: A clinical approach (2^d ed.), Appleton & Lange, Stamford, Connecticut.

RAND Research Brief (1999). Prescription drugs and the elderly: Policy implications of Medicare coverage.

Personal disclaimer:  This page is not a publication of North Georgia College & State University and NGCSU has not edited or examined the content of the page.  The authors of the page are solely responsible for the content.

Last updated on July 28, 2004, by Barry D. Friedman.