Gore, Bush Drug Plans: Debate Keys on Trust

At the heart of competing proposals by Al Gore and George W. Bush to cover the prescription drug costs of the elderly lies one of the oldest debates in health care.

Whom do you trust more to supervise your medical care: the private sector, in this case HMOs and health insurers, or the federal government?

The last time the question captured the nation’s attention, the private sector won hands down: In 1994, a coalition of insurers and employers defeated President Clinton’s health care reform initiative by tarring it as a bureaucratic nightmare that would lead to government rationing of medical services.

In Tuesday night’s debate, Gore and Bush invoked the ghosts of that epic battle as they denounced each other’s prescription drug proposals. Bush said Gore’s plan would be run by faceless bureaucrats; Gore said Bush’s would abandon frail seniors to the vagaries of the private insurance market, where they are at risk of getting no coverage at all. Each has said the other’s plan would cost Medicare participants more money out of pocket.

But much has changed since 1994, and it is far from certain how the issue will play in this year’s presidential election. And the facts, as often is the case in health care policy, are a little more complicated than Gore and Bush made them seem in their rhetorical duel.

Bush’s plan, for example, would rely on the government to set the basic rules under which private insurers would offer coverage to seniors. And Gore’s would rely largely on private market mechanisms to hold down drug prices.

In fact, the plans have several key points in common. Both candidates would fully cover the drug and health care costs of low-income Medicare participants. Both would attempt to shelter all beneficiaries from catastrophic prescription drug expenses.

At their core, however, the two plans would tilt the health care system in opposite directions. And health care experts say the basic distinction drawn by the two candidates is a good starting point for sizing them up.

Urban Institute President Robert Reischauer, a former director of the nonpartisan Congressional Budget Office, says the fundamental question boils down to this: “Would you rather have government in your medicine cabinet, or some executive worried about the share prices on Wall Street?”

Beyond that generalization, experts cite several other key considerations:

* Gore’s plan would provide more certainty, and probably more generous benefits, than Bush’s. But most seniors would get only one chance to sign up, and coverage options would be more limited.

* Bush’s plan calls for a far-reaching restructuring of Medicare that might make it more financially secure over the long haul. But the outcome, as well as the chances of congressional approval, are less certain.

* Gore’s plan would require far fewer changes in the existing Medicare program, and probably could take effect sooner than Bush’s. But the future cost to taxpayers would be much bigger.

Under Bush’s proposed Medicare overhaul, private health insurers and HMOs would play a larger role than they do today in determining the scope of the elderly’s health care, and particularly their prescription drug coverage. The health plans would decide which drugs they would cover, and how much seniors would have to pay for each prescription and for premiums.

Under Gore’s plan, the government would continue to run most of the Medicare program and would offer a standard drug benefit that seniors could either take or leave. Participants would know how much they would pay for each prescription and for coverage premiums because the amounts would be written in law.

It is difficult to compare the two plans in detail because Bush has offered few specifics beyond the summaries contained in his campaign documents. Gore’s plan, which in large part mirrors that of President Clinton’s, has received considerably more scrutiny by Congress and government number-crunchers.

Some experts, in fact, view Bush’s proposed Medicare overhaul and accompanying drug benefits as too speculative to analyze. They prefer to focus on the first stage of his plan, which is more concrete: If elected, Bush says he would immediately push through a four-year program to provide a prescription drug subsidy for low-income seniors and the disabled until the larger reforms are in place. The program would provide $48 billion and would be administered by the states.

“Bush’s program has two components, one of which is real and immediate. The other, in football, would be called a Hail Mary pass,” said Henry Aaron, a senior fellow at the Brookings Institution, a centrist think tank.

“The Hail Mary portion is the wholesale reform of Medicare,” said Aaron, an economist who has not endorsed either candidate’s plan. “The idea . . . has technical problems to be solved, and it involves concepts around which there is not a major consensus.”

There is little doubt that the elderly and near-elderly can take more comfort from the guarantees in the Gore proposal. His program would be run strictly by the federal government, which would continue to administer traditional Medicare coverage as well as the new drug benefits. Medicare beneficiaries would also have the option of moving into a Medicare HMO, as they do now.

Everyone would get the same drug benefits. The government would pay 50% of each participant’s prescription drug costs, up to a specified limit. The government would pay up to $1,000 in 2002, the first year of the program. The ceiling would rise to $2,500 when the plan is fully phased in.

For a participant who spends $1,200 a year on prescriptions, it would work out like this: Premiums would run $350 a year, and out-of-pocket co-pays would cost $600. That adds up to $950, for a net savings of $250.

Those seniors who chose traditional Medicare would have a onetime opportunity to sign up for drug coverage when they turned 65.

Gore officials say the limited sign-up is necessary to keep down the overall cost of the drug benefits. Without it, seniors might forgo drug coverage while they are relatively healthy, but sign up as soon as their drug costs rise significantly, pushing up the overall cost to taxpayers.

Under Bush’s plan, Medicare participants would have multiple choices. They could enroll in any one of an array of private insurance plans and HMOs, or they could remain in the traditional government program.

Every plan, including traditional Medicare, would be required to offer at least two variations: one with basic Medicare benefits and a second with drug coverage, too.

Although the details have not been worked out, the coverage offered by private plans and by the government initially would cover about $800 of prescription drug cost per year, according to Gail Wilensky, a Bush advisor and former administrator of the Health Care Financing Administration, which oversees Medicare. That’s less than the $1,000 the Gore plan would initially provide.

One of the main concerns cited by experts about Bush’s approach is that it would create incentives for healthier seniors to move into cheaper plans, leaving the sick in traditional Medicare. Previous analyses suggest that would drive up the cost of the traditional plan, making it--and any accompanying drug coverage--increasingly expensive for those who need it most. That could leave some seniors unable to afford coverage.

By making a prescription drug plan a centerpiece of his domestic policy, Gore virtually ensures there would be enough money to pay for it as long as he is president. Over the next 15 to 20 years, however, as the number of retirees grows and the cost of drugs rises, his plan would become increasingly expensive.

Bush’s program would cost an estimated $158 billion over 10 years, only about half as much as Gore’s. That suggests the elderly would shoulder a larger share of the burden of paying for prescription drugs under Bush.