Medicare Plans Are No Cure-All in Congress

A landmark expansion of Medicare is barreling through Congress, but one part of President Bush’s political base is reluctant to join the bipartisan ride: Free-market conservatives, who have argued for years that Medicare needs to be overhauled before a new prescription drug benefit is added.

While many Republicans see likely enactment of the benefit for the elderly as a political home run for their party, disgruntled conservatives see it as a public policy strikeout -- the squandering of a unique opportunity to bring fundamental, long-term change to the financially troubled program.

The bill the Senate began debating this week also is under fire from the left. While conservatives say the measure does not go far enough in reforming Medicare, liberals say it falls far short of the comprehensive drug assistance they believe seniors need.

But many liberals are supporting the bill as a foot in the door; they assume lawmakers will expand the benefit in future years. Conservatives, by contrast, despair that there will never be a better time to overhaul Medicare than while the carrot of a new drug benefit is dangling.

The House Ways and Means Committee approved a bill late Tuesday that would do more than the Senate’s bill to inject competition and market forces into Medicare. But it still would move less in that direction than many conservatives had hoped. The measure won approval on a vote of 25 to 15.

“It is measurably better than the Senate bill,” said Michael Franc, vice president of the Heritage Foundation, a conservative think tank. He expressed doubt, however, that it qualified as “a real reform bill.”

Conservatives want changes that encourage the elderly to exercise private-sector options for health care, arguing that would increase competition and, in the process, curb Medicare’s burgeoning long-term price tag.

Bush’s original Medicare proposal offered a powerful incentive for the elderly to choose alternatives to Medicare’s traditional fee-for-service program: Only those who signed up for private managed-care plans would get drug coverage. But that approach quickly ran aground in Congress, and the White House has indicated that Bush would be willing to sign legislation that did not include it.

Some Republicans say that retreat badly undercut any effort to accomplish broader reforms. “President Bush made it harder for us to come up with a responsible bill,” said Sen. Trent Lott (R-Miss.). Conservative suspicions of the Senate bill, which won bipartisan approval by the Finance Committee last week, were fueled when it was embraced by Sen. Edward M. Kennedy (D-Mass.), the liberal icon.

“When you have Ted Kennedy out there saying, ‘This is the greatest thing since sliced bread,’ our members are saying, ‘Why are we for this?’ ” said Sen. Rick Santorum (R-Pa.).

In a closed-door caucus Tuesday, Senate Republicans peppered legislative analysts with questions about the cost and consequences of the complex measure.

“The more you dig down into it, the more questions our caucus has about it,” said Sen. Charles Hagel (R-Neb.).

Still, GOP leaders predicted that the bill would pass the Senate with broad support by the end of next week. The House bill is expected to win the chamber’s approval next week, setting up negotiations on a final measure.

The House and Senate bills are similar in many respects. Both would provide $400 billion over 10 years to add a prescription drug benefit to Medicare and change the program to expand the role of private medical networks, such as preferred-provider organizations.

Under the Senate bill, beginning in 2006 the government would pay half of beneficiaries’ drug costs up to $4,500 a year, and 90% once out-of-pocket expenses exceeded $5,800. Beneficiaries would pay a premium averaging $35 a month, and have a deductible of $275 a year.

Beneficiaries could get drug coverage by joining a PPO or other managed care plan participating in Medicare. Alternatively, they could remain in Medicare’s traditional fee-for-service program, and obtain drug coverage from a stand-alone policy from a private insurer. If at least two such drug policies were not available in a given region, the government would step in as a fallback.

Whether beneficiaries chose a private plan or stayed with Medicare, they would receive identical drug benefits.

Conservative critics have said that means there would be little incentive for people to switch to a private plan. Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) acknowledged he might have to change the bill to address those concerns.

The House bill’s drug benefit has a smaller deductible -- $250 -- and would channel more benefits to people with lower drug costs. Medicare would pay 80% of costs up to $2,000 in drug spending and 100% of costs after a person’s out-of-pocket expenses exceeded $3,500 -- a threshold that would be set higher for people earning more than $60,000 annually. That introduces a controversial income differential to a program that for the most part has treated beneficiaries equally, regardless of income.

The House bill dropped the Senate government fallback provision ensuring a choice of drug insurance policies, leaving accessibility to drug insurance entirely to the private sector.

The bill also would eventually require the traditional fee-for-service Medicare program to compete with private health plans. Beginning in 2010, Medicare would join other plans in submitting bids to offer coverage. If Medicare costs were higher than private plans, beneficiaries would have to pay higher premiums.

House Democrats argued that the bill would shift too much responsibility to the private sector, undercutting one of the government’s most popular entitlements.

“Republicans want to privatize Medicare,” said Rep. Fortney H. “Pete” Stark (D-Hayward). “This bill is merely the first step.”

Ways and Means Chairman Bill Thomas (R-Bakersfield) said such concerns were unfounded. “You’re trying to scare seniors,” he said.

Both House and Senate bills were a blow to concerns among fiscal conservatives about burgeoning budget deficits. Skeptics have predicted the legislation will cost far more than its $400-billion sticker price.

“We’re talking about huge costs,” said Hagel, who is proposing a less-costly alternative that targets drug aid to the poor and uninsured elderly. “I don’t think anyone believes that the costs will be contained at $400 billion.”

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The House Plan

Here are key features of a Medicare prescription drug plan pending before the House Ways and Means Committee:

* The plan would fit into the $400-billion, 10-year budget framework proposed by President Bush.

* It would begin in 2006. Until then, seniors would get a discount card to help them pay for their drugs. Poor people would get some additional assistance.

* Seniors could have more choices of private health plans than they have now, including both health maintenance organizations and the more flexible preferred provider organizations. The bill would raise payments to HMOs, which have been dumping seniors and leaving Medicare.

* Benefits in these private plans would include prescription drugs, and plans could include such additional incentives as preventive care and chronic disease management programs.

* Seniors who chose to stay in the traditional fee-for-service government-run Medicare plan could do so and still purchase a subsidized, supplemental policy from a private insurer to cover their drug needs.

Source: Reuters

Los Angeles Times