Crunch Time for Medicare Overhaul

Voters in Pennsylvania’s 16th Congressional District, where the Amish travel in horse-drawn buggies and farms still function without electricity, know a thing or two about change.

For years, they’ve watched sprawling outlet malls overtake rolling hills and studied the brash efforts of neon-lighted hotels to attract the tourists who arrive eager to experience the region’s quiet -- and disappearing -- old-fashioned ways.

So when the federal government’s top Medicare official came to town last week to talk up the Bush administration’s plan to modernize the mammoth, 38-year-old health-insurance program, Lancaster’s seniors were worried.

Few were won over by Tom Scully’s repeated descriptions of the Medicare program as flawed, as “a 1965 insurance model” and “an unbelievable disaster.”

“We think it is a dumb system,” Scully, administrator of the Centers for Medicare and Medicaid Services, told an audience of health-care industry executives and seniors.

“But if seniors want it, they can keep it,” he added, explaining that the administration decided to keep traditional Medicare in its reform proposal because “most seniors are scared of change” and the president “didn’t want to be accused of taking something away.”

For Nicholas Gianopoulos, a survivor of World War II’s Battle of the Bulge, that was too much.

“My experience with Medicare has not been ‘dumb,’ ” the 79-year-old retired businessman told Scully. “It’s been pretty good. If there’s flaws in the system ... let’s ask Congress to correct the flaws.”

The exchange highlights a central conflict facing lawmakers as Congress begins working in earnest this week on Medicare reform. For many seniors here and throughout the country, the administration’s plan to modernize Medicare is perceived as more threat than promise.

Most seniors, and many Democrats, want nothing more than to add a prescription drug benefit to the existing Medicare structure. It pays the hospital, doctor, nursing home and other medical bills -- expected to total roughly $255 billion this year -- of more than 40 million senior and disabled Americans.

But the administration and most Republican lawmakers, who stress the increasingly shaky finances of the program, say Medicare must be overhauled if it is to survive the aging of the baby boom generation.

They want to remake Medicare in the image of private managed-care plans, a structure they say will control spending and offer seniors benefits such as drug coverage, disease management, preventive care and a cap on hospitalization expenses.

Before leaving Washington for spring recess, the House and Senate agreed to set aside $400 billion over 10 years -- the amount President Bush requested -- for Medicare reform with prescription drug coverage.

Some Democratic lawmakers say a meaningful drug benefit would cost twice that much, while others insist Congress should focus this year on providing drug coverage only to Medicare beneficiaries with very low incomes or extremely high medication expenses.

And while most Republicans are committed to reforming Medicare at the same time they add some form of prescription drug coverage, the Bush administration has given lawmakers nothing more than a general framework.

Even those Republicans who support the framework -- a three-tiered structure that offers the most generous drug benefits to seniors who leave traditional Medicare for a managed-care plan or HMO -- disagree on many of the details.

Despite more than 10 years of talk, widespread agreement among politicians and growing public demand for a prescription drug benefit, there is no guarantee Congress will pass Medicare reform legislation this year.

“It’s not at all a shoo-in that this is going to happen,” Scully said in Lancaster, where Rep. Joseph R. Pitts (R-Pa.) had invited him to speak. It was Scully’s second Medicare town meeting of the day and his 49th in two years.

Given the party breakdown and the parliamentary rules of both chambers, one possible outcome is a stalemate between a House-passed Medicare reform plan and a Senate-passed bill that does nothing but add drug coverage. It’s an outcome top administration officials are working hard to prevent.

“The drug benefit is the dessert,” said Bill Pierce, spokesman for the Department of Health and Human Services. “If you give them just dessert, they won’t come back for dinner.”

Many in Washington believe the approaching 2004 election season means this year is Congress’ last chance to successfully tackle the issue for some time.

To push for action, Health and Human Services Secretary Tommy G. Thompson has been meeting with members of key congressional committees and talking by phone to lawmakers. Many of the conversations are efforts to influence the language of the debate. Early on, Democrats and other lawmakers characterized the Bush proposal as a way to privatize Medicare and said seniors would be forced to leave their longtime doctors.

Administration officials vehemently reject that argument.

“For seniors on Medicare” now, Scully said, “nothing’s going to change.... Change will happen so incrementally most people won’t notice it.”

Conceding that no one knows how much a Medicare prescription drug benefit will cost, Scully described the administration’s proposed “Enhanced Medicare” option -- essentially a choice of preferred provider organizations, or PPOs -- as “the only model for delivery of a drug benefit that works.”

Medicare beneficiaries used $87 billion in outpatient prescription drugs last year, according to the Congressional Budget Office, and that figure is expected to increase to $128 billion by 2005. The budget office projected that, on average, a Medicare beneficiary would use $2,440 worth of prescription medications this year.

Among the options lawmakers are considering for seniors who stay in the traditional Medicare program is full coverage of all prescription drug costs in excess of $4,000 or $5,000 a year.

The dynamics of the Lancaster event also highlighted other obstacles to Medicare reforms. Physicians, nursing-home executives, nurses and other health-care providers dominated the question-and-answer period with complaints about Medicare payment formulas.

“The individual players in the delivery of health care are each concerned about protecting their own turf,” said Gianopoulos, the World War II veteran who attended the session.

Gianopoulos is among the 73% of Medicare beneficiaries who have limited drug coverage, either through a supplemental Medigap policy, retiree health benefits or a Medicare HMO. But those options are drying up -- a result of corporations cutting back on retiree benefits, HMOs limiting coverage or personal finances.

“But many seniors can no longer afford Medigap,” said Gianopoulos, a Republican who uses his accounting skills to help seniors do their taxes. “They just drop it, and Medicare is all they have.” Yet seniors’ need for prescription drug coverage -- which started the whole Medicare reform debate -- sometimes gets lost in the discussion of plan options and structural details.

One woman, who would identify herself only as a Lancaster resident, came to the forum wanting to hear about the prospects for a Medicare drug benefit.

Dressed in a mauve pantsuit, she sat with pen and paper in hand. After listening to 90 minutes of often technical talk about Medicare payments to doctors and nursing homes, she left early, deeply disappointed.

Bethlehem Steel, her husband’s former employer, had recently dropped the couple from its supplemental health-insurance policy. Now she and her husband, who has Parkinson’s disease, do not have any drug coverage. “We’re going to have to dip into our savings” to pay for medicine, she said, her eyes tearing up.

And then she asked her friend to take her home.