Last week, when Senate leaders announced they had agreed upon a bipartisan compromise for Medicare reform, Majority Leader Bill Frist insisted that the new proposal "meets all of the president's principles that have been laid out to date." Nothing could be further from the truth. When George W. Bush unveiled his vision for Medicare reform during January's State of the Union address, he was intent upon transforming it from a government-run insurance program into a system of competing private insurance plans--with prescription-drug coverage doing the dirty work. Basically, older Americans hankering for drug coverage would have a choice: Leave Medicare to enroll in a private health plan, or get no drug protection whatsoever. Even though seniors loved Medicare, the thinking went, they were so scared by skyrocketing prescription costs that they'd make the switch anyway, thereby accomplishing a transformation conservatives have long coveted.

But, with even some Republicans balking at such radical changes, the administration quickly backpedaled. After his initial concessions were spurned, Bush promised to let Senate Republicans, such as Finance Committee Chair Charles Grassley, broker a compromise. Grassley eventually came up with the scheme announced last week, under which Medicare beneficiaries who remain in the traditional program could get the very same drug coverage as those who opt for private coverage. In other words, Grassley and his colleagues ended up rejecting Bush's most fundamental reform principle. Yet, this week, Bush signaled that he'd sign the bill anyway.

Why the cave-in? Just look at the polls. Nearly 80 percent of Americans support delaying the 2001 tax cut to pay for Medicare prescription drugs. Bush may have been able to flout the weak and diffuse sentiment against a big tax cut in 2003, but there's a huge difference between giving people more of what they only desire weakly and not giving them something that they want desperately. As Harvard public opinion expert Robert Blendon explained to The Washington Post, "Karl Rove's strategy is that to maintain the majority, you have to do things. Two years from now, they'll have a list of health care items and something to check in each box."

But Bush had better hope the mere promise of benefits is enough to satisfy voters, because actual relief may not arrive soon--and, when it does, it could be much less than most people expect. So far, in the Medicare debate, journalists have fixated on the big distinctions and aggregate spending figures--Bush's $400 billion over ten years, the Democrats' $800 billion plan--rather than on the fine print. But it's in the fine print where all the problems are.

While the Senate rejected Bush's demand that seniors enroll in private health plans to get drug coverage, they left intact another conservative idea: Under the new compromise, the federal government would contract with private insurers to offer drug coverage rather than provide the benefit directly. So, while senior citizens wouldn't have to leave government-run Medicare to obtain drug protection, they would still have to get the drug coverage itself from a private insurer. Only if an area were served by fewer than two prescription insurers--say, in a rural state--would the government step in and offer benefits directly to seniors.

Doing this satisfies conservatives' free-market instincts, but it may not satisfy the need for drug coverage. The last effort to make private insurance companies more active participants in Medicare, in 1997, was a fiasco. Back then, private insurance plans rushed to offer new benefit packages, only to decide they couldn't make enough money from insuring illness-prone seniors. They fled the program in droves, stranding literally millions without coverage.

Putting private companies in charge of prescription coverage could turn out even worse. Plans that offer prescription-drug coverage will be covering a single, highly concentrated medical expense--in which a very small number of beneficiaries incur most of the costs--so making money would be even more difficult. Some plans would probably try to skim the Medicare population for the very healthiest (and cheapest to insure) patients, leaving other plans with disproportionately sick patients and wreaking actuarial havoc. That's one reason health insurance representatives quashed the idea in 2001 and seem none too eager to try it again. As one HMO analyst told The New York Times this week, "The private sector that is supposed to be excited about this isn't."

But these deficiencies look mild when compared with the likely benefit structure. If the present proposal were to become law, a senior citizen would pay a $275 deductible, then get coverage for half of his drug costs up to $3,450. After that, however, the senior citizen would get no help whatsoever until he had spent a total of $4,000 of his own money--or around $5,300 in total prescription purchases. For expenditures beyond that, drug benefits would kick in once again, though seniors would be responsible for 10 percent of these additional costs.

This Rube Goldberg design, with its large "donut hole," has no rational policy basis other than the need to stay within the agreed-upon $400 billion, ten-year price tag. After all, a good insurance policy should offer gradually more coverage as expenses go up--mixing shared responsibility for initial costs with protection against the financial strain more serious illness imposes. But, since only a tiny minority of seniors ever incur catastrophic drug costs, this drug benefit would work in precisely the opposite way for most seniors. For example, an elderly widow with $6,000 in annual pharmaceutical costs would end up paying more than $4,000 of her drug expenses--or two-thirds of her total costs--while a beneficiary with just $2,000 in costs would pay about half of the total bill. That's a total perversion of normal insurance principles.

Unfortunately, flipping the coverage would create its own set of problems, given that even the current proposal may strike many Americans as far too stingy. Less than half of Americans consider a plan that pays for 50 percent of seniors' drug costs an adequate benefit--a rational choice, given that private insurance plans for the non-elderly typically cover a lot more than that. Yet almost all Medicare beneficiaries will get less than that under the new plan. And, since nearly two-thirds of senior citizens have some (frequently inadequate) drug coverage already, the Senate's plan might actually leave these seniors not much better off than they are now. In fact, some might end up even worse off if employers respond to the new Medicare benefit by further cutting back retiree coverage.

The direst scenario would be a political backlash reminiscent of what happened after the short-lived 1988 Medicare Catastrophic Coverage Act, when a mob of seniors famously chased Dan Rostenkowski, the burly former head of the House Ways and Means Committee, into his waiting limousine. They were not reenacting Monty Python's "Hell's Grannies" skit; they were protesting the legislation's skimpy benefits (and its tax increase on the elderly alone, which this bill does not contain). Congress repealed the program a year later.

So perhaps the real solution to the prescription-drug problem is to include a benefit as part of Medicare and, yes, spend even more money on it. Remember, as big as $400 billion sounds, it is just a fraction of the nearly $2 trillion the Congressional Budget Office estimates seniors will spend on outpatient prescription drugs over the next decade. True, financing a larger prescription benefit would mean repealing or delaying the Bush tax cuts, raising insurance premiums, or increasing taxes. But, in the end, somebody is going to pay for these drugs anyway--the question is how that burden is distributed. Having Medicare cover drugs means spreading the financial responsibility progressively, with the wealthy subsidizing the non-wealthy and the healthy subsidizing the ill. The less Medicare covers, the more that burden falls on senior citizens and their families individually--a burden some can bear only with great difficulty and some cannot bear at all. Protection from such risk is the whole point of social insurance. That is why Congress should not only enact a Medicare drug benefit but also make sure it's an adequate and workable one--even if President Bush disagrees.