Bush May Tackle Medicare Reform, Despite Long Odds

Times Staff Writer

WASHINGTON -- Guaranteed health care for older Americans, now an article of faith for seniors and doctors alike, was once just another form of "socialized medicine" -- so insidious that the American Medical Assn. hired a Hollywood actor to make a phonograph record condemning the idea.

"If you and I don't stop ... " Ronald Reagan intoned, "we'll spend our sunset years telling our children and children's children what it was like in America when men were free."

The AMA campaign failed, and in 1965 Congress enacted the program still known as Medicare.

Far from threatening the 65-and-older generation, it has become a zealously guarded entitlement for 40 million older and disabled Americans.

In his State of the Union address tonight, President Bush is expected to propose significant reforms to Medicare.

But in doing so, he may soon get the same political lesson learned the hard way by several presidents before him: When it comes to health-care policy, no proposal is more controversial than the one that appears to exert government influence on the price of health care and the choice of doctors.

Although few details were available, some outsiders familiar with the administration's thinking predicted Monday that the speech itself would raise more questions about Bush's intentions than it answers.

But information floated by officials last week suggests that Bush's Medicare reform proposal could appear, at least to the typical Medicare beneficiary, to offer too much control and too little choice.

"It might be what the doctor ordered, but it won't be what the patient will accept," said Robert D. Reischauer, president of the nonpartisan Urban Institute and a former director of the Congressional Budget Office.

Bush is expected to propose tying the administration's favorite Medicare cost-cutting tool, managed care, to the program's most popular -- and costly -- potential benefit, coverage for prescription drugs. Specifically, beneficiaries would be required to join a Medicare-contractor health maintenance organization or preferred provider organization to receive prescription drug coverage.

The thinking behind the proposal is simple: By giving more Medicare beneficiaries an incentive to move into managed care -- only 11% of them now belong to HMOs -- the growth in Medicare spending would slow and taxpayers would be better able to afford the significant costs -- some estimates range as high as $466 billion over 10 years -- of a significant drug benefit.

While the president and his advisors may be "dead right" on the logic behind their proposal, Reischauer said, "it's not politically viable."

Several analysts predicted that a more likely outcome, at least in the next year or two, is a limited prescription drug benefit.

One option would be to restrict the benefit to low-income seniors; another would be to tailor it to beneficiaries with catastrophic medication costs, prescription bills exceeding, say, $4,000 or $5,000 a year.

The key problem with Bush's plan to restructure Medicare -- and virtually all health-care reform proposals -- is that while Americans want it all, there's not enough money in the federal budget to pay for it all, Reischauer said.

"Consumers want a choice of doctors, prescription drug coverage and low prices. We're unwilling to accept any constraints," he said.

The political prospects for reform often boil down to the division between those lawmakers, most often Republicans, who say Americans must swallow their cost-cutting medicine and those, usually Democrats, who argue that there has to be a better, less painful way to provide Americans with the health care they deserve.

Stuart Butler, vice president of the conservative Heritage Foundation, put it this way: If efforts both to modernize Medicare and to put it on a more sound financial footing are to succeed, "part of what must happen is a shattering of illusions."

Medicare beneficiaries are "getting much more than what they paid for [in taxes], and their children and grandchildren are going to be paying for it" if the program is not restructured, he said.

But Henry J. Aaron, a senior fellow at the nonpartisan Brookings Institution, predicted that the Bush proposal would be dead on arrival, in part because the Bush administration's tax-cut policies have drained the federal treasury of funds needed to enact more significant -- and costly -- Medicare reforms.

"It is not going to scratch where it itches," Aaron said. "It's fine to have a long-term vision, but between here and the long term is the here-and-now."

Another potential problem is the failure of previous efforts to attract Medicare beneficiaries. Complaining of insufficient payments from the government, many Medicare HMOs have cut benefits or dropped out of the program, sending 2.4 million beneficiaries back to fee-for-service care over the last five years.

Yet virtually everyone sees some kind of Medicare reform in the not-too-distant future.

While Medicare has served older Americans well for almost 38 years, the program still functions largely on a 1965 model, and its weaknesses -- and the failures of previous, more modest reforms -- are starting to show.

The program offers no coverage for the medications that have since become a critical part of medical treatment, for example, and fee cuts that drive physicians out of the program are leaving more seniors without access to care.

"The real question is what is the dominant Medicare program we want for the next generation or two," said Gail R. Wilensky, a senior fellow at Project HOPE and the administrator of Medicare and Medicaid under the former President Bush.

"Many people -- not just Republicans -- believe it's just irresponsible to have this very expensive [drug] benefit without changing the structure" of the program, she said.

Still, she predicted, "the debate will take a while to play itself out."

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