June 6, 2003 - There were two articles above the fold on today’s local news page here in Central Illinois. One featured the city council debate on amendments to its liquor control ordinance to make it possible to issue licenses to gas stations to sell beer and hard liquor and to a new Latin Dance Club aimed at young people. The other story described how social workers were dispatched to the junior high to help students deal with grief over their classmate who died in a car driven by a drunk teen. The prevailing side of the council debate argued that permitting gas stations to sell alcohol was necessary to facilitate business and increase sales taxes. After assuring the council that he would provide security guards to prevent underage patrons from buying drinks the proprietor of the new dance club got his license as well. The other story told how the battery of social workers helped the kids understand death and its ceremonies in a “death denying” society. Presumably there was some mention of the role of alcohol in the death while the kids were being helped, but the article did not mention it.

Government at every level seems to be able to ignore inevitable consequences as it amends its regulations to ease the way of business. The consequences of facilitating business activity, if not ignored, are written off as unavoidable social costs of progress. Progress is defined as business expansion. Whether the issue is reducing or eliminating taxation of business income; reducing or elimination restrictions of polluting emissions; or relaxing fuel economy standards; or granting a local liquor license to gas stations the inevitable consequences get lost in the glare. We don’t see them until they hit and by then it is too late.

The Senate is expected to pass a Medicare Prescription Drug bill for seniors. Social Security recipients would pay $35.00 per month - $420 per year as a premium. They would pay the first $275 in drug costs as a deductible. Medicare would cover 50% of costs up to $3,750 or $1737.50 out of pocket for the retiree. The retiree would pay would pay 100% of the costs between $3750 and about $5,300 a year or $1,550. A retiree whose drug costs were $5,300 a year would have an out of pocket cost then of $3,932.50 or about 74% of the total. After $5,300 a year the program would pick up 90% of the cost. The Senate plan would apply to all Social Security recipients equally. For most seniors who rely of life preserving prescription drugs to manage chronic medical conditions it will amount to a 25% subsidy of their drug costs.

In the 1930s the nation struggled to make medical care affordable to its poorest citizens. The AMA was fighting to hold off moves toward socializing the industry. The doctors created Blue Cross-Blue Shield group insurance programs to avoid a government program. The average cost for an office visit was then $5 to the patient and that was the amount that the plan paid. Reasoning that if patients could afford to pay $5 before the plan they could still afford to fork over that $5 bill doctors uniformly increased their fees to $10. We can expect the same dynamic to work here. What is missing is a mechanism to cap drug prices.