Sunday, November 30, 2003

Medicare changes - Con: It's a cynical blueprint to kill program

By Sen. Jack Reed

WASHINGTON - Since 1965, Medicare has provided dependable health care for our seniors. But, in the last decade, with tremendous advances in the use of prescription drugs and extraordinary increases in their cost, it has become more and more obvious that Medicare must be expanded to cover the cost of prescription drugs just as it was initially created to cover the cost of hospitalization and visits to doctors.

In 1995, Republican Congressman Newt Gingrich declared his intention to let Medicare "wither on the vine." His hostility toward Medicare met a swift rebuff from Democrats in Congress, and, more important, from the American public who understood the critical need and value of Medicare.

Today, Republican hostility to Medicare persists, but it has been camouflaged under the guise of a prescription drug benefit. As such, we are on the verge of a historic "bait and switch."

Administration officials, their congressional allies and lobbyists for the drug and insurance industries cobbled together a bill that provides an inadequate drug benefit for seniors to entice support for the legislation while providing huge subsidies to the insurance industry to "privatize" Medicare.

Scheduled to begin in 2006, the prescription drug benefit would require a monthly premium averaging $35 and a deductible of $275 before Medicare would cover 75 percent of an individual's drug costs.

However, because of inadequate funding overall and the diversion of resources to HMOs, if a senior's drug costs reach $2,200, then Medicare will pay nothing at all until the senior has spent $3,600 in the year.

At a time, when many seniors will need assistance, this "gap" will provide them nothing while they are still obligated to pay their premiums.

Medicare works because it covers every senior. It spreads the risk. And it works because Medicare is willing to subsidize the cost of providing health care to seniors. The Bush proposal fragments coverage and provides subsidies, not directly to senior health care costs, but to the bottom lines of HMOs.

The Bush proposal divides seniors along lines of age and health. By giving incentives to HMOs, it will encourage them to enroll the youngest and healthiest of seniors. This is the population that has the lowest average health costs.

That leaves, of course, the oldest and sickest seniors in Medicare. Traditional Medicare costs will rise disproportionately and, with less help from an already deficit-ridden federal government, both quality and support will wane.

The irony is that we already know that Medicare delivers high quality at lower costs than HMOs. In addition, it gives seniors the comfort of selecting and maintaining their doctors.

A 2003 report by the Trustees of Medicare estimated that reimbursements for HMO enrollees would exceed the average fee-for-service costs of traditional Medicare. Why would anyone pay more to an HMO for similar benefits available through a public program? It is about advancing an ideology and favoring special interests.

The Bush proposal also divides seniors along lines of income. For the first time, seniors will be "means tested" to determine how much they must pay to participate in Medicare. At some point, particularly as the cost of traditional Medicare increases, wealthier seniors will abandon the program.

Finally, there is nothing in the proposal to curb accelerating costs. Republicans rejected giving Medicare the market clout to negotiate with drug companies on behalf of seniors.

Under this bill, Medicare beneficiaries will be forced to pay an extremely high price in exchange for a prescription drug benefit that will provide little relief. It was the wrong bill to approve.


Sen. Jack Reed (www.reed.senate.gov) is a second-term Democrat from Rhode Island and a member of the Senate Health, Education and Labor Committee. Readers may write him at 320 Senate Hart Office Building, Washington, DC 20510.

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