Bush Offers Plan on Health Care

Charging that the Clinton administration has reneged on its promise to mend Medicare, Texas Gov. George W. Bush on Tuesday proposed a $198-billion overhaul of health care for seniors that would provide at least some prescription drug coverage for all elderly Americans.

Bush would spend $110 billion over 10 years to “modernize” the 35-year-old Medicare system, which helps pay for the health care of 39 million elderly and disabled Americans.

Unlike Vice President Al Gore, who would expand the Medicare system, Bush would change the program by allowing seniors to remain in Medicare or choose annually from a range of private plans, including those offered by health maintenance organizations. If passed by Congress, it would amount to the largest structural change in Medicare since its inception.

The Bush plan would subsidize the cost of prescription drug coverage for seniors at all income levels to some extent, and it would pay all drug costs for the lowest income seniors--individuals living on less than $11,300 a year or couples with a household income of up to $15,200.

Bush envisions a four-year transition period in which the federal government would give the states $48 billion in grants to provide what he calls an “immediate” prescription drug benefit for the very poorest seniors, along with paying all drug costs for seniors above $6,000 a year.

In addition, he endorsed congressional efforts to restore cuts to Medicare providers, such as hospitals and doctors, that were enacted in 1997 as part of the federal Balanced Budget Act. The cost would be $40 billion. Gore also supports such Medicare restoration efforts at the same level.

“Eight years ago, Bill Clinton and Al Gore promised Medicare reform,” Bush said as he unveiled his plan at a senior residence here. “Four years ago, they did the same. This is a patient country, but our patience is wearing thin. This is not a time for third chances; this is a time for new beginnings and new leadership.”

In a prosperous, peacetime election year, with the debate driven by the interests of aging baby boomers and their elderly parents, health care--and particularly Medicare reform--has rapidly gained momentum as a campaign theme.

Adding to the urgency of Medicare reform efforts is the fact that the number of Americans receiving benefits is expected to double in the next 30 years as the number of workers paying into the system drops.

Plan Doesn’t Slow Democrats’ Attacks

Democrats have spent the last several weeks chastising Bush for making health care reform promises without particulars. Although Bush has run a campaign ad vowing to offer prescription drug coverage to seniors, until Tuesday he had given no details about how he would accomplish the politically tricky feat.

Gore wasted no time Tuesday deriding the Republican presidential nominee’s plan, charging that it would force seniors into bare-bones HMOs if they want prescription drug coverage and would leave millions of elderly people without coverage for necessary medicines.

Campaigning in Columbus, Ohio, Gore said that “the biggest problem” with Bush’s plan is that “there is no money to pay for it” after the 10-year, $1.3-trillion tax cut that Bush also has proposed.

Gore has rejected the kind of fundamental changes in Medicare touted by Bush. Instead, the Democratic nominee for president wants to add to the existing program a guaranteed prescription drug benefit for all seniors at a cost of $253 billion over 10 years. That amount does not include restoration of Medicare cuts to doctors and hospitals.

Today, more than 80% of seniors receive health care in the traditional Medicare “fee for service” program, under which the government makes payments directly to doctors and hospitals. Most of the rest enroll in HMOs.

In recent years, HMOs affiliated with Medicare have been terminating their coverage of thousands of seniors, especially in rural areas, complaining that reimbursements from the government are too low. An industry survey released in June showed that HMOs planned to cancel coverage next year for more than 700,000 seniors enrolled in Medicare HMOs.

Under the reforms Bush endorsed Tuesday, Washington would provide a fixed sum of money for seniors to purchase health insurance from a range of plans, including the existing Medicare program.

Benefits would vary from plan to plan, with the most expensive plans offering the broadest coverage, such as prescription drugs and vision and dental care. Less expensive plans would offer less generous benefits.

If a plan cost more than the sum provided by the government each year, seniors would have to make up the difference out of their own pockets.

For seniors earning 135% of the poverty rate or less, Bush would provide subsidies sufficient to cover the full cost of purchasing a plan offering prescription drugs. This would help Americans avoid what he described as the “cruel choices some seniors face: Heat or medicine. Food or pills.”

Those earning more would receive smaller subsidies, on a sliding scale, to purchase plans that included prescription drugs. The smallest subsidy--given to seniors with household incomes of more than $19,700 for couples or $14,600 for individuals--would pay for 25% of the cost of the insurance premiums for prescription drug coverage.

Bush and supporters of the plan in Congress--led by Sens. John B. Breaux (D-La.) and Bill Frist (R-Tenn.)--say this approach will provide seniors more flexibility by allowing them to choose plans that offer the benefits they need most. And they maintain that the competition between plans to enroll the elderly will help keep down Medicare’s costs in the future.

As Bush pointedly noted in his speech, those arguments have been endorsed by the Democratic Leadership Council, the centrist organization chaired by Sen. Joseph I. Lieberman (D-Conn.), Gore’s running mate.

Critics Point to Several Flaws

Critics, led by Gore, argue that the plan Bush has embraced is flawed in several respects. Citing government analyses, they say that under the formulas used in this new approach, premiums would rise by as much as 47% for seniors who choose to remain in the existing Medicare program.

Those studies--which the Bush campaign disputes--are the basis of Gore’s contention that these reforms would drive seniors into health maintenance organizations, which would likely be cheaper.

Gore also argues that the Bush approach would produce unequal care. Each candidate’s plan would guarantee access to prescription drugs for the poorest seniors. But under the Bush approach, middle-income seniors would receive only a relatively small subsidy from the government to purchase prescription drug coverage.

As a result, critics say, many middle-income families may still not be able to afford plans that provide adequate coverage for prescription drugs, while the affluent would be able to buy such coverage with their own money.

“The exposure is, if you are middle income, can you afford the high-end, high-option plans that are going to give you full benefits? Or are you going to have to choose the lower-cost, low-option plans?” asks Diane Rowland, executive director of the nonpartisan Kaiser Commission on Medicare and the Uninsured.

But many advocates of the Bush approach say it makes sense to target benefits toward the neediest seniors. Republicans say Gore’s plan squanders government money by providing a publicly subsidized drug benefit even to affluent seniors who may now have adequate private coverage.

By rejecting such a universal program, Bush inevitably introduces more uncertainty for the elderly. Under Bush’s approach, seniors would face significant variations in their coverage and out-of-pocket costs depending on what drug benefits are offered by the private insurance companies participating in the new system in their areas.

Gore’s plan, by contrast, establishes a common set of prescription drug benefits and costs for all seniors.

Bush’s $48-billion proposal for state grants to provide seniors with prescription drugs raises similar questions about uncertainty. Bush calls this proposal the “Immediate Helping Hand” program and argues that it is the fastest way to get crucial help to those in need, because many states already have some program in place.

Democrats, like Health and Human Services Secretary Donna Shalala, criticized the idea as a crapshoot for seniors because states would be entirely free to decide what benefits, if any, to offer.

According to the National Conference of State Legislatures, 14 states have prescription drug programs that subsidize drugs for the elderly in place, and another six states have legislation on the books that will go into effect in the next few years.

The programs vary widely in how many seniors are eligible for the subsidized drug coverage, the amount of the co-payments and the number of drugs that are covered. In all, only about 1 million seniors are enrolled in the existing state programs.

Republican congressional leaders said the idea of expanding these state programs tracked largely with proposals they are pushing in Congress.

* Times staff writers Alissa J. Rubin, Edwin Chen, Megan Garvey and Matea Gold contributed to this story.

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Comparing Their Plans

Medicare--the federal health care program for the elderly and disabled--does not pay for prescription drugs. Although 25 million Medicare recipients have prescription drug coverage through some other medical plan, about 12 million recipients have no drug coverage at all. Here’s how Republican George W. Bush and Democrat Al Gore say they would address the problem.

* MEDICARE REFORM

George W. Bush

Would fundamentally change Medicare. Instead of guaranteeing a specific benefit, the government would provide seniors a fixed sum of money to purchase health insurance. Seniors could use the traditional Medicare program or choose from a range of private plans, including those offered by health maintenance organizations. Benefits would vary from plan to plan.

Al Gore

Would broaden Medicare. He would also allow people from the ages of 55 to 65 to buy into Medicare--and provide a tax credit toward their premiums. Proposes putting Medicare funding in a “lock box” so that Medicare payroll taxes could only be used to support Medicare or pay down the national debt.

*

BASIC DRUG PLAN

George W. Bush

Medicare recipients could choose from several health plans and could select prescription drug coverage as a benefit. The government would pay for at least 25% of drug-coverage premiums for all seniors and would shoulder an even larger share for the elderly poor.

Al Gore

A prescription drug benefit would be available to all Medicare recipients. Those people enrolled in the plan would pay half of their drug costs; the government would pay the other half. During the first year, the government would pay a maximum of $1,000. That would rise to $2,500 in 10 years.

*

BENEFITS FOR THE POOR

George W. Bush

Low-income seniors would pay nothing. Free coverage would be offered to individuals earning up to $11,300 and couples earning up to $15,200. For seniors on the edge of poverty--those individuals earning $11,300 to $14,600 a year and couples up to $19,200--the government would pay a portion of their premiums.

Al Gore

If the plan was offered this year, individuals who earn $11,200 or less annually would pay nothing. Prescription drugs for seniors with incomes between $11,200 and $12,450 would be partially subsidized.

*

PREMIUMS

George W. Bush

No cost to poor seniors. For everyone else, the government would cover at least 25% of their premiums. Costs would vary depending on the health plan chosen.

Al Gore

The elderly poor would pay nothing. For everyone else, premiums would be about $25 a month in the first year, rising over 10 years to more than $40 a month.

*

CATASTROPHIC COVERAGE

George W. Bush

The most anyone in the program would pay out of pocket for drugs would be $6,000 a year. The government would pay any drug costs over that amount, picking up all other health care costs over $6,000 after Bush’s plan has been in effect for four years.

Al Gore

The government would pay any drug costs over $4,000 a year. This provision is designed to cover “catastrophic” illness.

*

OVERALL COSTS

George W. Bush

An estimated $198 billion over 10 years. This figure includes $48 billion to go to the states immediately to cover drugs for the poor and the catastrophically ill over four years. Then $110 billion would go toward overhauling Medicare and partially covering all seniors’ drug costs. Would also restore $40 billion in cuts to Medicare providers.

Al Gore

An estimated $253 billion over 10 years. Also favors restoring $40 billion in Medicare cuts, although that is not part of his drug plan.