How to Fix the Medicare Mess

Ben Peck

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 coverage.

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, choloster­al, 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 Amer­cians the nation­al pri­or­i­ty it deserves to be. 

Congress considered human need only after placating the drug and insurance industries.
Ben Peck is the Wash­ing­ton Pol­i­cy Direc­tor at the Medicare Rights Center.
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