Bush Adds Managed Care to Debate on Drug Benefit

President Bush did far more Tuesday night than signal the beginning of a new round in the debate over a Medicare drug prescription benefit.

By proposing to tie eligibility for the benefit to participation in a managed-care plan, Bush also changed the rules of the high-stakes political battle.

Last year, Senate Republicans and Democrats came tantalizingly close to agreement on a compromise benefit package. After weeks of back-room politicking and serial votes over the details of the benefit and how much it would cost, in the end all that separated the partisans was a disagreement over how the benefit should be delivered.

Senate Republicans, along with their counterparts in the House, wanted private insurance companies and pharmacy benefit managers to administer the benefit, while Democrats wanted Medicare -- that is, the government -- to do it.

But now, with Republicans in control of Congress, and congressional Democrats lining up to run against him in 2004, Bush has upped the ante.

Instead of using the drug benefit to bring some private-sector competition into the Medicare program, he wants to make prescription coverage the driving force for a more thorough privatization of Medicare itself.

In addition, last year’s proposals envisioned a Medicare drug benefit for all beneficiaries; only in the waning moments of the Senate debate did many lawmakers agree to a benefit available just to low-income seniors.

But Bush’s benefit would be available only to beneficiaries who joined managed-care plans -- HMOs or PPOs, which are less restrictive physician networks.

What remains to be seen is whether this fundamental shift in the terms of the debate would bring Medicare’s 40 million senior and disabled beneficiaries any closer to a prescription drug benefit. Also still unknown are the details of Bush’s proposal, some of which he could reveal as soon as today in a speech in Grand Rapids, Mich.

In the State of the Union address, Bush called Medicare “the binding commitment of a caring society” but offered only general statements about his proposal to “reform and strengthen” the program.

Rather than proposing a prescription drug benefit for all seniors, he spoke of “giving seniors access” to medicines.

“Seniors happy with the current Medicare system should be able to keep their coverage just the way it is,” he said. Others, he said, “should have the choice of a health-care plan that provides prescription drugs.”

Bush said he would propose spending an additional $400 billion over 10 years on Medicare, but it was unclear how much of that would fund a prescription drug benefit.

The leading drug benefit proposals considered by Congress last year would have cost $310 billion to $390 billion over 10 years, and most analysts believe the cost of a program passed this year would have to rise to at least $400 billion to account for the higher number of Medicare beneficiaries.

Reaction to Bush’s proposal -- much of it issued before he spoke -- ranged from severe to supportive.

Some health-care consumer groups accused Bush of pulling a fast one by using seniors’ need for help with prescription drug costs to lure them into managed-care plans.

“Under this proposal, seniors are forced to choose between the drug coverage they so desperately need and the doctors they have come to depend on,” said Ron Pollack, executive director of Families USA.

Robert M. Hayes, president of the Medicare Rights Center, said “the way to fix Medicare ... is to expand it to cover prescription drugs,” which he acknowledged would “cost some money. But Americans are willing to delay or do without tax cuts to cover this cost.”

Bill Novelli, CEO of the AARP, reiterated his group’s view that “affordable prescription drug coverage must be available to all beneficiaries” but did not reject the use of some incentives to encourage beneficiaries to join lower-cost health plans.

The Health Insurance Assn. of America, the Federation of American Hospitals, the American Medical Assn. and the United Seniors Assn. were among those expressing support for the president’s proposal.

“We agree with President Bush that making a prescription drug benefit available to older Americans can best be accomplished in the context of modernizing and strengthening Medicare,” said Dr. Donald Young, president of the health insurers group.

The one thing virtually everyone in Washington agrees on is that Medicare should cover prescription drugs. Fully a quarter of Medicare beneficiaries lack any prescription benefits; the remainder have some coverage through HMOs, retiree health plans or supplemental Medigap policies that they buy.

Medicare beneficiaries used $87 billion worth of prescription drugs last year, government figures show. By 2005, that figure is likely to be closer to $128 billion.

All of that adds up to a Medicare prescription drug benefit that is very expensive, and even many seniors advocates understand Bush’s effort to control costs.

But they question whether forcing beneficiaries into managed care is the proper tool. Over the last five years, about half of Medicare HMOs have dropped out of the program.