Medicare Reform Is Far From a Cure-All

Ro hobbled into a senior center in Contra Costa County, leaning on her metal cane for support. She unfolded the attached seat and began to talk about her troubles paying for prescription drugs. Now 79, she has to take seven medications--for glaucoma, arthritis, high blood pressure and the stomach pains caused by her arthritis drug. The drugs cost from $300 to $400 a month, a sum easily approaching half of her $650 Social Security benefit.

About the only pleasure she had had in recent years was a box of See’s Candies that a friend used to bring. But the friend had just died, and Ro could only hope that her friend’s daughter would still visit and bring some candy. Buying it herself was out of the question. After filling her prescriptions, she had little money left over for food.

She had gone from HMO to HMO, using up the drug benefit and moving on to another. Although she had Medicare, she could have applied for Medi-Cal, California’s version of Medicaid (the federal-state health-care program for the poor), and gotten her prescriptions covered, but she was too proud to accept welfare.

Ro epitomizes the plight of seniors who are struggling to buy food, cover the rent and pay for drugs whose costs have been rising at a rate of 14% to 19% a year. Almost half of Medicare’s 35 million senior recipients have family incomes of less than $20,000, and it’s not unusual for them to spend one-quarter or more of it on uncovered health care expenses, including medications. Ten million beneficiaries, mostly older and poorer, have no drug coverage at all.

Ro, at least, could piece together some coverage from health maintenance organizations. But for thousands of senior Californians, managed care is not an option. Twenty-three counties have no HMOs, and in the 35 that do, drug benefits vary widely, according to a report released by the California HealthCare Foundation and the Center for Consumer Health Choices at Consumers Union. That report showed that even Kaiser Permanente, the HMO with the best drug coverage in most places, covered only half to two-thirds of a typical senior’s drug costs.

Theoretically, beneficiaries can buy a Medigap policy with drug coverage. These policies pay for services that Medicare does not. For one of the three standardized Medigap policies with a drug benefit, California seniors age 65 would pay annual premiums ranging from $1,800 to $7,800. Insurers charging $7,800 don’t really expect consumers, who probably need the coverage, to buy these policies, and most can’t afford them. California’s discount drug program, which allows Medicare beneficiaries to buy drugs at a reduced rate, is a help to some, but it doesn’t address the core problem of rising drug prices.

The grim financial realities for seniors, the growing consensus that something must be done to help them, and an erstwhile surplus in the federal treasury might make it seem that adding drug coverage to Medicare would be easy. But it isn’t. For one thing, the pharmaceutical industry fears that the government might eventually control the prices of its products. For another, some politicians appear interested only in the tried and true American solution to such problems--targeted help for the very poorest.

Last week, the president outlined his approach--a discount drug card and structural changes in Medicare itself. One would expand the role of private insurance plans to provide benefits.

This would open the door to a voucher plan “solution” that would make things worse for millions of seniors. The plan, pushed by conservative members of Congress, would transform Medicare into a private market scheme. Seniors would get a sum of money to buy a policy in the marketplace. As health care inflation eroded the value of the voucher, the responsibility for the rising cost of care would fall to each beneficiary, not the government, as it does now.

Under the guise of reform, this proposal would take the federal government out of the health care business for seniors. In the long run, proponents of vouchers want taxes now going to Medicare to shrink, along with government spending for the program. But such a strategy is shortsighted.

A forthcoming study on projected retirement income for current workers shows that the baby boom generation, especially women who are ill and living alone, will be able to pay considerably less than half the cost of the care they will need that won’t be covered by insurance. The study was done by the Employee Benefit Research Institute, a nonprofit organization that studies employee benefits, and the Millbank Memorial Fund, a philanthropic organization interested in health policy. Imagine people like Ro finding the cash to cover the increased costs of basic care plus medications.

It’s possible they could stay in Medicare--and the president envisions that--but “the critical issue is what would happen if traditional Medicare disappeared because it got too expensive,” says Robert Blendon, professor of health policy at the Harvard School of Public Health. “You would have to pay more each month just to keep what you have now.”

Vouchers are sure to be on the table as the Medicare debate unfolds. When supporters and the media toss around the code words “reform,” “modernization” and “structural improvements,” it’s wise to ask: What kind of reforms? Who is pushing them and why? But most important, if vouchers become the solution of choice, who will pay for seniors’ health care when they cannot?

Congress passed Medicare in 1965 because seniors could not afford to buy private insurance. A solution that takes us back to the days before Medicare is no solution at all.

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Trudy Lieberman is the author of “Consumer Reports Complete Guide to Health Services for Seniors” (Three Rivers Press, 2000). Send comments to: trudyal530@aol.com. Health Matters appears on the third Monday of the month.