Medicare Reform Could Backfire on Republicans

The Medicare prescription drug benefit doesn’t kick in until 2006, and seniors won’t have access to a stop-gap drug discount card until June. But the Medicare reform law already is packing a powerful political punch, and threatens to become the boomerang issue this election year.

In December, President Bush signed the bill into law in an elaborate ceremony -- symbolizing Republican hopes of capitalizing on the historic expansion of the program that finances medical care for millions of seniors and disabled people. But ever since, Democrats, aided by labor, consumer and senior citizen groups, have been hammering the GOP as being more concerned about drug manufacturers and insurance companies than Medicare recipients.

Just how sensitive the issue is becoming was illustrated Friday afternoon by an unexpected development involving one of the major television networks.

CBS News announced that the network would no longer run an administration-sponsored, taxpayer-funded ad promoting the new law as the “same Medicare, more benefits” until a government investigation of its legality was completed. The inquiry was promoted by Democrats in Congress, who have charged that the ads amount to political statements, which under the law cannot be paid for with tax money.

The administration and congressional Republicans were stung by CBS’ decision.

“They’re bowing to political pressure,” said an angry Kevin Keane, spokesman for the Department of Health and Human Services. “If CBS wants to deny seniors information about the new law and the 1-800 number, that’s their prerogative. But their theory [that the ad is more political than informational] is bogus,” he said.

A spokesman for a top House Republican who declined to be identified went so far as to accuse CBS Executive Vice President Martin Franks of pulling the 30-second ad because “he is a partisan Democrat” who has contributed $59,000 to Democratic candidates -- including $1,000 to presidential candidate Sen. John F. Kerry of Massachusetts -- since 1996.

Franks denied that politics played any role in the network’s decision to pull the ad after it had run six times. “We just thought that since there was a [General Accounting Office] investigation going on, it was prudent to wait.”

The CBS decision was only the latest disruption to the $12.6-million Medicare advertising campaign. ABC officials last week asked the administration to qualify the statement, “You can save with Medicare drug discount cards,” by adding the phrase “savings may vary.”

The vehement GOP reaction to CBS’ move reflected a growing frustration with the Democrats’ apparent theft of what Republicans had expected to be a major benefit in the campaign.

Democrats have “been trying to scare seniors by telling them that we’re totally dismantling Medicare,” Keane said. “That’s where the misinformation is coming from.”

Administration officials and leading Republican lawmakers are not the only ones surprised to see their Medicare victory reap a harvest of political trouble.

“It is a huge shock that this thing is coming back as an issue,” said Robert Blendon, a Harvard University professor of health policy. “The debate left [Republicans] more vulnerable than they expected to be.”

The administration has recently lost the support of some of its own. Conservative Republican lawmakers who reluctantly had voted for the legislation were furious when the administration revealed that the Medicare reform could cost $534 billion, rather than $400 billion, over 10 years.

With the GOP counterattack just getting underway and some concrete benefits of the law -- lower HMO premiums and some drug discounts -- scheduled to kick in long before November, Republicans could yet break even or come out ahead on the politics of Medicare.

But while few political analysts expect to see this fall’s elections won or lost on that issue alone, most agree it is ripe for exploitation by Democrats.

“Detailed descriptions of this bill don’t help sell it,” said a Democratic campaign consultant, who asked not to be identified. “So the people who really don’t like it are more than willing and able to define it as a Republican giveaway to the pharmaceutical companies and insurers.”

The law, which for the first time allows Medicare beneficiaries to sign up for partial coverage of their medications, also gives private insurance companies and managed-care plans up to $46 billion in higher payments and incentives to compete with traditional Medicare for the prescription drug business, as well as the general healthcare business, of a huge and growing segment of the population.

By emphasizing two relatively minor provisions of the law -- one that prohibits the government from negotiating directly with drug makers for lower prices and another that essentially refuses to legalize the purchase of U.S.-made drugs from Canada -- Democrats also have tapped into the view that prescription drugs cost too much.

Michael Ross, 66, of Laurel, Md., called the law a “rip-off that makes the drug companies richer,” and referred to its no-negotiation clause as a “big stupid thing.” As for the Republican argument against the importation of drugs from Canada -- that they have not been certified as safe by the U.S. Food and Drug Administration -- the self-identified Republican of 40 years shook his head in disgust.

“I don’t see Canadians falling down dead” from bad drugs,” Ross said following a town hall meeting on the Medicare law.

Public-opinion polls indicate that as many as half of U.S. adults are dissatisfied with the voluntary Medicare drug benefit, which beginning in 2006 will reimburse most seniors for 25% of their annual medication costs up to $2,250. Beyond that point, however, beneficiaries will have to pay 100% of their additional costs up to $5,100, as well as pay monthly premiums and meet an annual deductible. The plan covers 95% of drug costs over $5,100.

The benefit is far more generous for low-income seniors.

Rep. Deborah Pryce (R-Ohio), chairwoman of the House Republican Conference, is encouraging members to conduct home-district workshops and tape public-service announcements about the law. The issue is “still a jump ball” for most seniors, she said in an interview.

With the help of consultants and pollsters, Republican campaign committees were working hard last week to shape their Medicare message.

“The next few months are critical” in shaping voters’ opinions about the law, said Carl Forti, spokesman for the National Republican Congressional Committee. “Our summary point is that the law is a very good start at helping seniors afford prescription drugs.”

Senate Republicans also have been pushing that theme.

Last week, Majority Leader Bill Frist (R-Tenn.) and Sen. Rick Santorum (R-Pa.) hosted a gathering of several seniors and private health plan executives to showcase the lower premiums and better health benefits that soon will be available to many of the 4.6 million beneficiaries who are enrolled in Medicare HMOs.

The benefits packages, which Republicans are counting on to lure more seniors into private health plans, are being financed by an average 10.6% increase in government payments to Medicare HMOs this year.

It is not clear, however, how much political mileage Republicans can get out of lower premiums for the 11% of seniors who belong to Medicare HMOs when the new law does little to lower the cost of prescription drugs.

“Cheaper drugs would have meant a lot more” than a new Medicare benefit to seniors who already had some drug coverage, Blendon said.

The Republicans’ best hope for winning seniors’ political support is the Medicare-endorsed discount card, he said, because “Americans love discounts.” But Republicans, who concede that Democrats are making inroads on the cost issue, have refused to give in to Democratic calls for direct negotiation with drug companies on prices and safe drug imports from Canada.

Bush promised in his State of the Union address to veto any efforts to modify the Medicare law, and Frist said Republicans are focused on “aggressively explaining” their position. “Over time, competition will work better than price fixing,” he said.

Republican pollster David Winston sees one key weakness in the Democrats’ attack.

“Nobody ever expects Congress to do something perfectly,” he said. “Republicans need to say, ‘Look -- it’s not prefect, but it’s progress.’ ”