by John R. Graham

Odd as it sounds, the USmight be further along the road to a national Pharmacare plan than Canada is. Although Americans have no “universal ” health care, those over 65 years old are enrolled in Medicare, a pro-gram launched in the 1960s that now ac-counts for about 16 percent of US health spending (CMS, 2005). In con-trast to Canada, where provinces primar-ily legislate and finance government-run health care, states have no role in US Medicare. The federal government has the sole responsibility to tax, borrow, and spend for this almost $300 billion program. A risky reform US Medicare did not include prescrip-tion drugs when it was designed four decades ago. Most pharmaceutical cov-erage has been provided commercially or via Medicaid, the joint state-federal program for low income Americans. All this changed radically in December 2003, when President Bush signed the Medicare Modernization Act, which brought a prescription drug benefit to Medicare. Many conservatives were sur-prised to see a Republican President and Congress introduce the largest new enti-tlement since the “Great Society ” era. It’s not like Medicare and Medicaid haven’t got a big enough toe-hold in US health care already. Combined, they already accounted for one third of US health spending, before the introduction of the Medicare drug benefit (CMS, 2005). Because of an innovative design, the Republicans argued that they had intro-duced sorely needed “free market” incentives into Medicare. This appears to be wishful thinking. It is far more likely that an opportunity to create a “consumer-directed Medicare ” has become more remote; that the “free market ” incentives (already attenuated) will disappear; and that Big Govern-ment has taken another big step into American health care, from which it will be extremely difficult to push back. J u n e 2 0 0 6 | 1