Medicare Reform Remains a Pivotal Campaign Issue

In late November, as the Senate prepared to vote on a bill to add prescription drug coverage to Medicare, the two lawmakers who since have emerged as the leading contenders for the Democratic presidential nomination expressed their opposition.

Sen. John Edwards of North Carolina, voting against what he called a “giveaway” to health maintenance organizations and drug companies, issued a “when I am president” statement that promised a “prescription drug bill for the American people.”

And when the actual roll call was postponed by half a day, Sen. John F. Kerry of Massachusetts missed the final vote, opting instead to make a campaign appearance in Iowa.

Now, with Kerry and Edwards leading the Democratic field into next week’s Super Tuesday contests in California and nine other states, Medicare reform remains a defining campaign issue -- highlighting what some see as key differences between the two major parties, if not between the leading Democratic candidates.

Edwards’ vote against the legislation and Kerry’s absence during the roll call is where the Democrats’ differences on the issue largely begin and end. But during the general election campaign, Medicare will provide sharp contrasts between President Bush and whoever sits atop the Democratic ticket.

Both Democratic senators characterize the Medicare law -- which creates a prescription drug benefit while giving private insurers billions of dollars to lure seniors away from the traditional program and into managed care -- as an egregious example of the power of corporate special interests in Washington.

Meanwhile, the Bush administration, which had planned to cite the new drug benefit on the campaign trail as a major domestic policy achievement, recently has had to play defense on it. Having insisted that the benefit would cost no more than $400 billion in its first 10 years, the administration found that its own budget estimates had jacked the cost up to $534 billion.

The General Accounting Office, the investigative arm of Congress, is pursuing Democratic charges that the administration’s $12.6-million advertising campaign and $10-million flier explaining the law are more political than educational.

And in response to seniors’ complaints about a gap in the drug benefit, Republicans have emphasized the lower premiums and better benefits that soon will be available to the 12% of Medicare’s 40 million senior and disabled beneficiaries who belong to HMOs. They also have highlighted the Medicare-endorsed discount card that all seniors will be able to use from June until the drug benefit takes effect in 2006.

The drug benefit is complicated.

In return for an initial premium of about $35 a month and a $250 deductible, the standard benefit will pay 75% of seniors’ annual drug costs up to $2,250, and 95% of their drug costs above $5,100, but nothing in between. The benefit is far more generous for the poorest seniors.

Democrats have capitalized on the law’s complexity by focusing on what the legislation does for drug companies and HMOs. Earlier this month, Kerry cited the Medicare law and Bush’s healthcare policies as evidence of the president’s “extremism.”

“Instead of a prescription drug benefit for seniors under Medicare, they pass a sham bill that gives the prescription drug companies a $139-billion benefit and counting,” Kerry said, citing an academic’s estimate of the increase in prescription drug sales that the new law will generate.

“We are fighting for the mainstream value of healthcare as a right and not a privilege -- for the principle that seniors should not have to choose between food and medicine -- and that your family’s health is just as important as any politician’s in Washington,” Kerry said in Richmond, Va., a few days before that state’s primary.

Edwards has weaved the Medicare law into his tale of two different Americas and “two different governments in Washington.” “We’ve got one for the insiders and the lobbyists and the people who get whatever they want every single day,” he said last week in Largo, Md. “Whatever there is left [is] for you.”

As a result, he said, “Look what we ended up with: billions of taxpayer dollars going to HMOs instead of going to seniors, driving seniors out of Medicare into HMOs.”

HMOs and other private health plans are expected to receive an additional $500 million in Medicare payments this year. Seniors will not be forced to join managed-care plans to get prescription-drug coverage, but opponents of the law argue that the private plans’ one-stop shopping advantage and government-subsidized premiums eventually will drive seniors who need the benefit to join one.

Edwards and Kerry agree on other controversial provisions of the law. Both say they would repeal the section that bars the government from negotiating directly with drug firms for lower prices. They oppose the law’s restrictions on importing U.S.-made drugs from Canada, and say they would require the Food and Drug Administration to ensure that safe, cheaper drugs are made available to all Americans.

Edwards has addressed Medicare’s financial prospects. He says that by negotiating for lower drug prices, combating fraud and waste and managing the treatment of chronic conditions, Medicare could save billions of dollars a year. He would invest the savings in the Medicare trust fund, which is expected to go broke in 2026.

Edwards’ plan for expanding healthcare to the uninsured, while not as comprehensive as Kerry’s, would allow Americans without health insurance to join the Medicare program at age 55.