How to Fix the Medicare Mess
by Ben Peck
In These Times magazine,
The Medicare overhaul legislation that
Congress passed just before Thanksgiving does too much to help
special interests and too little for the seniors and people with
disabilities who rely on Medicare for their health care.
If Congress had been designing this legislation
with people in mind, it would have added a drug benefit to the
original Medicare program and insisted that Medicare negotiate
directly with the drug companies for low prices on their drugs.
Unfortunately Congress only considered
human need after it addressed the demands of the drug industry,
the insurance industry and those ideologically zealous Congressional
leaders who would like Medicare, as older Americans have come
to know and rely on it, to wither on the vine.
First, Congressional leaders ensured that
the legislation did not offend the drug companies-major patrons
of both major political parties, but overwhelmingly generous donors
to the Republican party.
The drug companies' primary concern is
protection of the high prices they charge in the United States.
Dutifully, Congress included a provision in the legislation prohibiting
Medicare from using the market power of its 41 million members
to negotiate lower prices The cost of that provision: $139 billion
in additional profits to the drug industry over eight years.
Next, the legislation had to appease the
ideologues who insist that private health insurance plans be given
a greater role in the Medicare program. Since private plans have
recently been leaving the Medicare program in droves, the only
way to lure them back was to pay them-big time. The 10-year cost
of luring private plans back into Medicare: $12 billion in new
subsidies on top of $67 billion in existing subsidies. Somehow
we have a Congress saying that we save money by paying for profit
insurers about 25 percent more than original Medicare to provide
The ideologues argue that people with
Medicare need more opportunity to enroll in private plans and
that private plans will be a powerful new tool to control the
costs of the program. They believe both of these claims in the
face of overwhelming evidence to the contrary.
Dollars directed to drug companies or
private insurance companies are dollars drained from health benefits,
including coverage of prescription drugs, for people with Medicare.
After the second round of tax cuts enacted
earlier this year, White House funding for a Medicare drug benefit
already was too little to provide comprehensive coverage. But
after Congress attended to the interests of the drug and insurance
industries, there was even less. The result is a drug benefit
that many will find meager.
For most of the 41 million people with
Medicare, the benefit would cut off once a person's total drug
costs reach $2,250 and would not start again until their drug
costs hit $5,100. That means that many people who depend on prescription
drugs to control their blood pressure, cholesterol, diabetes or
a host of other medical needs will be unable to afford their medicine
come July or August. For some, the erratic nature of the benefit
may be more dangerous than no coverage.
What is more, the benefit gets much worse
as drug prices rise in the future. In 2013, the eighth year of
the program, those with the largest drug costs would be responsible
for approximately $5,000 in drug costs. The legislation will be
a huge step backward for millions of people with better coverage
from their employers who will drop that coverage as a result of
the passage of this legislation. For the poorest of the poor,
the legislation offers worse coverage than they currently enjoy
from their states' Medicaid programs.
However, for some, the legislation does
offer real benefit. The near poor would enjoy enhanced benefits
and once people's total drug costs reach $5,100 the legislation
offers generous coverage, paying 95 percent of costs. However,
even the coverage for the low-income is limited by an assets test,
which would mean that half of those eligible would not get the
benefit because they would not be able to surmount the bureaucratic
barriers to coverage.
The willingness of zealots to attack the
program's fundamental character represents a relatively new development
in Medicare, which enjoyed broad bipartisan support for most of
its first three decades. This changed in 1994, when Newt Gingrich
and other ideologically driven crusaders came to power in Congress.
Voters now need to hold the members of
Congress who passed this bill accountable. They need to vote them
out of office in 2004 and send back to Washington a Congress that
will fix this mess.
A new Congress should start by passing
legislation that focuses on the needs of people with Medicare.
The government should be given not just the power, but the mandate,
to negotiate directly with the drug companies for lower prices.
Congress should enact legislation imposing
prescription pricing parity with Canada. U.S. citizens should
not pay double the prices for life saving medicines that citizens
in Canada and the rest of the industrialized world pay.
Message to Congress: take away the Christmas
gifts for the drug and insurance industries and, for once, make
the health of older and disabled Americans the national priority
it deserves to be.
Ben Peck is the Washington Policy Director
at the Medicare Rights Center.