by Desiree Jackson and Brittany McLean
Thomas Beaumont, a reporter from the Des Moines Register, wrote an article on Oct. 2, 2007, describing Republican presidential candidate Fred Thompson’s opinion on the costs of the Medicare prescription drug benefit. In his article, Beaumont reported that,
“Thompson referred to a recent report by the U.S Social Security and Medicare Trustees that showed an estimated shortfall of $72 trillion in the nation’s entitlement programs. According to the report, $61 trillion of that involves Medicare spending. In May, the Bush administration projected that the prescription drug program would cost $734 billion over the next 10 years, billions less than previously estimated.”The issue with this statement is that the reporter says that the prescription drug program, now costing “$734 billion over the next 10 years, would cost billions less than previously estimated.” [italics added]
The fact is that this program is now costing hundreds of billions more than previously estimated. This bill’s projected cost has continuously increased throughout the past four years.
The Medicare bill (see link for full saga) originally passed by Congress in November 2003 was projected by the Bush administration to cost $395 billion over 10 years. President Bush signed the bill into law in December of 2003. Less than two months after the bill was signed, Bush announced that the bill would actually cost $534 billion, 35% more than projected. In a subsequent investigation by the U.S. Congress, the Medicare program’s actuary testified that executive branch officials had ordered him to withhold the “true” cost estimate from Congress during the debate over the bill.
In February 2005, the White House released figures that estimated the cost of the Medicare Prescription Drug Benefit would cost $1.2 trillion in the coming decade.
So although the current projected cost of $734 billion (quoted in the Des Moines Register) is lower than the 2005 estimate, it is still much higher than the original cost projections for the Medicare drug benefit.
Lesson: Whether the program at issue is Medicare prescription drugs or other federal benefits, it pays to be skeptical of cost projections, especially when officials are (a) claiming to project total spending more than five or 10 years out, or (b) making these claims in the highly political climate of a closely-fought debate and vote on major legislation.
