A Political History of Medicare and Prescription Drug Coverage

This article examines the history of efforts to add prescription drug coverage to the Medicare program. It identifies several important patterns in policymaking over four decades. First, prescription drug coverage has usually been tied to the fate of broader proposals for Medicare reform. Second, action has been hampered by divided government, federal budget deficits, and ideological conflict between those seeking to expand the traditional Medicare program and those preferring a greater role for private health care companies. Third, the provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 reflect earlier missed opportunities. Policymakers concluded from past episodes that participation in the new program should be voluntary, with Medicare beneficiaries and taxpayers sharing the costs. They ignored lessons from past episodes, however, about the need to match expanded benefits with adequate mechanisms for cost containment. Based on several new circumstances in 2003, the article demonstrates why there was a historic opportunity to add a Medicare prescription drug benefit and identify challenges to implementing an effective policy.