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Senate OKs Sweeping Overhaul of Medicare
By James Gerstenzang
Los Angeles Times
Tuesday 25 November 2003
WASHINGTON -- The Senate voted today to make the most sweeping changes in Medicare since the health-care program for senior citizens and disabled Americans was established in 1965. By a vote of 54 to 44, it approved a bill adding a prescription drug benefit and encouraging a greater role for private managed-care plans.
President Bush, who is likely to use the measure as a centerpiece in the domestic-policy component of his reelection campaign, said: "This is a good bill and I'm looking forward to signing it."
The House approved the nearly $400-billion measure after an extraordinary three-hour vote Saturday morning.
Critics of the measure complained that it provided insufficient coverage, began moving the program toward greater private control, was a boon to the health-care and insurance industries, and cost too much. Its supporters praised it as a necessary step, although less than perfect, toward helping Medicare beneficiaries meet the escalating costs of prescription drugs, which are playing a far greater role in medical care than when the program was developed at the heart of the Great Society era.
The two days of rancorous Senate debate, capping months of on-again, off-again private negotiations and public pressures, brought to the fore the arguments over Medicare's course in the future, and, indeed, the course of health care in the United States.
Senate Majority Leader Bill Frist (R-Tenn.), who was a heart surgeon before his election to the Senate, said that the elderly "will finally have the prescription drug coverage they need and the choices they deserve."
He said that the measure would, at the same time, preserve traditional Medicare.
Sen. Edward M. Kennedy (D-Mass.), who as a freshman senator supported the Medicare program as it was being developed, said the changes would leave the program's beneficiaries "in the cold arms of the HMOs."
Speaking shortly after the vote to doctors, administrators and local officials at a hospital on the outskirts of Las Vegas, Bush said passage of the Medicare bill was a "major victory to improve the health care system in America."
In remarks emphasizing a continued role for Medicare in meeting the health needs of the elderly and disabled-an apparent recognition of concerns about the programs future raised by critics of the measure, Bush declared:
"The Medicare system is a central commitment of the federal government It's a basic trust that has been upheld throughout the generations. We're keeping that trust."
In a flurry of post-vote commentary, Democrats, Republicans and a multitude of interest groups sought one more time to make their arguments at the center of a debate that is only likely to pick up in volume as the 2004 political campaigns grow.
"Many seniors already understand what a betrayal this is and they're furious," said Senate Minority Leader Tom Daschle (D-S.D.)
House Speaker J. Dennis Hastert (R-Ill.) emphasized the plan had developed at last some bipartisan support and said it was "the most significant enhancement to Medicare since its creation four decades ago because it changes our health care delivery system for the better for today's seniors, tomorrow's baby boomers and future generations."
But public opinion appears split, according to the University of Pennsylvania's National Annenberg Election Survey.
The survey, polling 860 adults last Wednesday through Sunday, found 40% favoring the bill, 42% opposed, and the others with no opinion. But, the survey found, those 65 and older, opposed the measure by a margin of 49% to 33%.
Democrats who opposed the Medicare changes had sought to delay the vote, hoping that as more attention was brought to the shifts it would make in Medicare, opposition would grow, particularly among the elderly who depend on it to meet the costs of health care. They have presented it as a measure benefiting primarily the pharmaceutical and insurance industries, rather than recipients of Medicare.
The debate is likely to spill over into the political arena throughout 2004, and could well become an underpinning of the presidential contest and campaigns for the House and Senate.
"The Senate is on trial," Kennedy said. "Let us not turn our backs on our senior citizens so insurance companies and pharmaceutical companies can charge senior citizens even higher prices."
He said Monday that passage of the measure "starts the unraveling of the Medicare system."
Sen. John F. Kerry, also of Massachusetts and a Democratic presidential candidate, said: "This bill is really about President Bush passing the buck on prescription drug coverage and passing the bucks from seniors to the pharmaceutical industry."
Two other candidates, Sen. John Edwards of North Carolina and Sen. Joseph I. Lieberman of Connecticut, joined Kennedy in expressing opposition to the measure.
At the center of the legislation is an optional prescription drug benefit for most seniors that would begin in 2006. For the first $2,250 in drug costs each year, Medicare would pay 75% after a $250 deductible. Then there would be a gap in coverage, with patients solely responsible for the next $2,850 in drug costs.
Once seniors had paid $3,600 out of their own pockets, Medicare would cover 95% of the cost of subsequent prescriptions. The monthly premiums, starting at about $35, and annual deductibles would increase with inflation.
In addition, the bill would set aside more than $14 billion in payments and risk-sharing for health maintenance organizations and preferred-provider organizations.
The funds are intended to encourage managed-care plans to participate in Medicare and to help them offer better benefits packages at lower costs than the traditional fee-for-service program Medicare offers. Starting in 2010, pilot programs in six areas would allow managed-care plans to compete with the current program.
For the more than 4 million retirees who have supplemental health coverage through their unions or former employers, the drug benefits they receive are more generous than the Medicare benefit. To encourage employers to maintain that coverage, the bill includes more than $71 billion in subsidies.
Other groups that stand to benefit from the Medicare bill include private insurance companies and health plans, which would have access to $14 billion in subsidies and risk-sharing payments from the government; rural hospitals and doctors, which would receive some $25 billion in additional payments; and hospitals that treat large numbers of illegal immigrants in their emergency rooms. They would receive an additional $1 billion over 10 years.
In addition, the bill would allow Americans of all ages with high-deductible health insurance policies to bank thousands of dollars each year in tax-sheltered health savings accounts. Health-related withdrawals would also be tax-free.
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Bad Medicine
Salt Lake Tribune | Editorial
Monday 24 November 2003
Big drug companies and private insurers with billions in profits at stake will benefit more than the elderly if the U.S. Senate goes along with the Republican plan that narrowly passed the House at dawn Saturday to expand Medicare to help seniors pay for prescription drugs.
The elderly, especially the very poor, desperately need help to pay for medicine. The bill that squeezed through the House by a 220-215 vote offers some relief, but it also gives pharmaceutical companies a nearly free rein to fleece taxpayers with exorbitantly priced drugs.
The bill would provide 40 million elderly and disabled Medicare beneficiaries a government subsidy to purchase private insurance to help pay for prescription drugs. It provides about $86 billion to encourage employers to keep retirees in employer drug plans and $12 billion to encourage preferred provider organizations to give Medicare-subsidized coverage to seniors.
The catch, though, is that the bill gives big drug makers a protected market but fails to place curbs on pricing.
A provision that would have allowed seniors to buy drugs from Canada, where they are substantially cheaper, was removed from the bill. That means Medicare beneficiaries will be forced to pay, and taxpayers to subsidize, whatever prices the drug companies charge.
The bill does have some pluses besides helping seniors pay drug bills. For the first time since Medicare started in 1968, beneficiaries with higher incomes would pay higher premiums for their doctor coverage. It includes $25 billion to close the gap in Medicare reimbursement rates between urban and rural hospitals and give rural doctors higher payments -- a provision that would help Utah's low-income rural Medicare patients.
Nevertheless, the bill would cost taxpayers at least $400 billion over 10 years, an expense the country can ill afford in a time of huge deficits and the continuing conflict in Iraq. The daunting expense is even harder to justify when more than 41 million Americans, including many young families and children, have no health insurance at all.
Picking up the tab for high-priced medicines will force the deficit even higher over the coming decade. If the Bush tax cuts become permanent, the nonpartisan Congressional Budget Office projects annual deficits of at least $150 billion through 2013.
Along with those concerns, some opponents of the bill are rightly worried about a plan to establish six test projects where the traditional Medicare program would compete with private insurers. In the past, such privatization, in the form of Medicare HMOs, has led to higher premiums.
There is no doubt that seniors, especially those on limited incomes, need help to pay for drugs. But expanded Medicare should be approved only if it is combined with measures to cut the cost of drugs and rescind the Bush tax cuts.
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