The absence of prescription drug coverage under Medicare has long been a major gap in
healthcare for seniors. In the late 20
th
Century this gap became severe as hundreds of new and
effective prescription drugs came onto the market and pharmaceutical companies increasingly
advertised their products directly to consumers. The higher demand coupled with patent-restricted
supply enabled companies to rapidly increase the prices of their most popular drugs. In the four-
year period beginning in 2000, for instance, the 30 most common prescription drugs for seniors
increased 27.6% -- over two and a half times the general rate of inflation.
Politically, any expansion of Medicare benefits to address this problem cut two ways. On
the one hand, senior citizens had become by the late 20
th
Century a large and attentive voting
block, represented in Washington by the expansive AARP, among other organizations. On the
other hand, the looming retirement of the baby boomers heightened the fiscal sensitivities of
politicians in both parties that Social Security insolvency might be only a generation away, even
without new benefits. Thus did the bipartisan Medicare Catastrophic Coverage Act of 1988
require seniors to finance most of their new coverage themselves, only to have seniors revolt
against the high premiums and force Congress to rescind the benefit only a year later.
Some of these same forces influenced the political unfolding of the Medicare prescription
drug benefit that was eventually enacted in 2003. In early 1999, President Clinton called for
legislation to provide prescription drug coverage to seniors, and leading Democrats in Congress
proposed Medicare legislation to do that. Several versions of the bill were hotly debated, but
none reached the floor in either chamber before Clinton left office, in part because of Republican
opposition to a new and costly entitlement. Instead, three years later, President Bush and a
Republican Congress passed the most significant expansion of the Social Security system in
almost 40 years, with a projected cost of 400-600 billion dollars for the decade beginning in
2006. And they did this over the strong opposition of the very Democrats who had pushed
Medicare prescription drug coverage onto the agenda in the first place.
2
Marc Kaufman and Bill Brubaker, “Study: Drug Prices Outpace Inflation, Price Increases Undermine
Medicare Discount Card.” Washington Post, May 25, 2004.
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