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Plenty of second opinions over Medicare overhaul

Date Posted: November 28 2003

The massive federal Medicare system may be set for the biggest overhaul in the program's 38-year history. Whether or not it's a good overhaul depends upon who you talk to.

The centerpiece of the changes being discussed by leaders in Congress is adding a prescription drug benefit to Medicare. The proposal is being pushed by Republicans in Congress, and enough conservative-leaning Democrats have expressed interest in the plan to make passage feasible.

The Wall Street Journal boiled the argument down to this: "How big a role should competition among profit-seeking companies play in the Great Society program that insures one out of seven Americans?"

The compromise plan, announced earlier this month, would cost U.S. taxpayers $400 billion over 10 years. A bruising showdown is expected between Republicans, who want even more private competition for Medicare dollars and services than the bill allows; and Democrats, who feel that existing law doesn't provide a sufficient safety net for the program, which insures 40 million Americans.

The Republican plan would include public subsidies for private insurance plans that work in the Medicare market, and an ambitious project that would force Medicare to compete directly with private plans. Drug importation from Canada would be outlawed.

Republican and Democratic legislators who have signed onto the plan explained that the bill would give the elderly a prescription drug benefit beginning in 2006. The plan would require individuals to pay an extra premium of $35 a month plus a $275 deductible per year. In exchange, the elderly would pay about 25 percent of their drug tab and the federal government would pay the rest, until the tab reaches $2,200 per year.

Then, the recipient would pay everything until racking up $3,600 in out-of-pocket prescription expenses. After that, the federal government would step in again, and pick up about 95 percent of the rest of the costs. Low-income people would get extra aid.

Seniors who stay in traditional fee-for-service Medicare would buy drug coverage from private companies. Those who switch to private health plans, such as HMOs or PPOs, would get drug coverage as part of their benefits.

The Journal said the deal "represents a big win for the drug industry: it's almost certain to increase prescription drug use with taxpayers picking up some of the tab." Health insurers and HMOs will also gain with new subsidies. The Journal also said for the elderly with no drug insurance and for those with very high drug bills, "the legislation is clearly a big plus."

Perhaps the biggest boost that this bill could receive came from the powerful American Association of Retired People. "Though far from perfect," read an AARP statement, "the bill represents an historic breakthrough and an important milestone in the nation's commitment to strengthen and expand health security for current and future beneficiaries."

AARP said the plan provides "significant protections" for those in traditional Medicare, with the federal government providing coverage in areas where private plans fail to offer coverage. The group said an unprecedented $88 billion will be allocated to encourage employers to maintain existing health retiree benefits.

But not everyone has signed onto the bill. Not even close. The AFL-CIO and others are pointing out that the bill:

  • Moves Medicare toward privatization and steer seniors and people with disabilities to private HMOs.
  • Forces 32.5 million beneficiaries to pay higher premiums and other Medicare costs.
  • Open the doors to a whopping $139 billion in profits for the pharmaceutical industry.
  • Does nothing to rein in soaring prescription drug costs.
  • Threatens the employer-provided drug benefits of millions of retirees.

"This is a social experiment and we are using our seniors as guinea pigs," said U.S. Sen. Ted Kennedy, who is fighting for better benefits.

Added Edward Coyle, executive director for the 2.7 million-member Alliance for Retired Americans: "Under the proposed bill, Medicare as we know it will cease to exist. They may say they are looking out for seniors, but they are really protecting the profits of the big pharmaceutical companies and insuring increased profits for the insurance industry.

"(This) is not the answer seniors have been waiting for. They are waiting for Congress to add a prescription drug benefit to the most effective, most successful, most efficient health insurance program in the nation - Medicare."

Stay tuned.