Killing Medicare

[Guest guest]

http://www.alternet.org/story.html?StoryID=17258

 

 

Killing Medicare

 

By Trudy Lieberman, The Nation

November 25, 2003

 

The Medicare " reform " legislation just passed by Congress sends the program on a

path to destruction. Crafted in the heady days of the Great Society, Medicare

has worked reasonably well for almost four decades for seniors and disabled

Americans, many of whom are unable to buy health coverage in the private market.

But the nation's financial commitment to Medicare – $215 billion in 2000 – got

in the way of the right's ideological goals of reducing the cost of government

and making people fend for themselves. So nearly a decade ago, right-wing

politicians and their allies at the Heritage Foundation embarked on a campaign

to transform Medicare into a private insurance program and ultimately to remove

the government from the business of guaranteeing healthcare for the oldest and

sickest citizens.

 

 

 

The new law lays the foundation for cutting benefits and increasing the amount

of money beneficiaries will pay for care. The right knew it could never get

control of Medicare's expenditures by overtly cutting benefits and raising

premiums, so embedded in the legislation are provisions that give cover for

doing exactly that. The so-called cap on what the government can spend on the

total Medicare program is essentially a trigger that requires Medicare trustees

to declare the program insolvent when spending from general tax revenues reaches

45 percent of the inevitably rising program expenditures. The $400 billion set

aside for the prescription drug benefit will be financed through the general

revenues. (Medicare is also financed through payroll taxes and premiums paid by

beneficiaries.) Opponents say this arbitrary definition of insolvency aims at

creating a crisis and generating political momentum for benefit cuts and more

cost sharing.

 

 

 

The first step toward privatization mandates that private insurers, not the

government, provide prescription drug benefits, the legislation's ostensible

raison d'etre. The government will funnel money to the insurance plans, which

will then charge a premium to beneficiaries. Only in special circumstances will

Medicare be allowed to offer drug coverage directly. In 2010 privatization will

accelerate when commercial health plans in certain metropolitan areas will be

able to sell insurance benefits in direct competition with those offered by

traditional Medicare. Legislative architects hope that cheaper premiums and

richer benefits will entice seniors to leave Medicare. Those offers will target

the healthiest people, who won't cost insurers a lot of money. The sick will be

stuck in the traditional program, unwanted by commercial carriers and forced to

pay escalating premiums, since there will be less money available. For those who

leave there are no guarantees.

 

 

 

The current experience with the Medicare HMO market provides a clue to the

future. A decade ago Medicare HMOs lured beneficiaries with generous benefits

and charged no extra premiums. But when Medicare slashed payments to them, they

reduced benefits and began charging premiums as well as high deductibles and

co-payments.

 

 

 

The experience in California shows what can happen. The Center for Consumer

Health Choices at Consumers Union, in its ongoing study of the California

Medicare market, found that the once-rich coverage offered by HMOs withered

substantially as government payments declined relative to the costs of providing

care. Next year, for example, Kaiser Foundation Health Plan will no longer offer

brand-name drug coverage, leaving most of the state's beneficiaries without

coverage for the most expensive drugs.

 

 

 

The modest drug coverage authorized in the bill is hardly worth the price of

privatization. Those with chronic illnesses and ongoing drug expenses will see

little benefit because of the convoluted benefit structure. The average Medicare

beneficiary, who is currently without drug coverage and who spends about $2,300

on prescriptions, will actually spend $2,900 in 2007 even with the new benefit,

assuming drug costs continue to rise at the same rate. That's likely, since

Congress has placed no cost controls on pharmaceuticals and indeed expressly

forbids the government from using its muscle to bargain for lower drug prices,

as it does in the Veterans Administration health system.

 

 

 

Also, the bill makes it virtually impossible to reimport cheaper drugs from

Canada. And although the bill authorizes subsidies for very-low-income seniors

to help pay increasing premiums, co-payments and deductibles, some 3 million

people will lose out because of eligibility limits placed on income and assets.

Those just over the line will struggle mightily.

 

 

 

The bill does, however, represent brilliant political strategy on the part of

its proponents, who began seeking allies as far back as 1995. AARP's support was

not surprising, given that right-wing interests attacked its tax exemption that

year and that then-Senator Alan Simpson of Wyoming, who had opened an

investigation, told AARP officials, " I want you to know that the intensity of my

investigation will be directly related to your fight on Medicare. "

 

 

 

AARP got the message. The financial goodies for special interests – eliminating

the planned payment cuts to doctors, the $25 billion to rural hospitals and

doctors, the $12 billion in special payments to entice private insurers to offer

benefits – ensured the support of powerful lobbyists and gave wavering lawmakers

a reason to support the measure. Arkansas Senator Blanche Lincoln said she voted

for the bill because the extra money was helpful to rural health providers.

 

 

 

Over time, the legislation will splinter political interests, predicts Harvard

government professor Theda Skocpol. " The genius of Medicare was that it included

poor people and the middle class. It wasn't designed as charity or welfare, " she

says.

 

 

 

That solidarity will crack as people no longer get the same benefits or even pay

the same premiums. The wealthiest beneficiaries will now pay more. With people

getting benefits from Aetna, Cigna and Blue Cross, what reason will they have to

support Medicare? One thing the new bill won't provide is help understanding its

bewildering new rules. That's because the final legislation stripped out $40

million that had been earmarked for state insurance counseling programs.

 

 

 

The repercussions from this legislation will be felt years from now when seniors

and the disabled realize that they can't pay for their healthcare. Couple that

with the prospect of less retirement income as employers shed their pension

plans and the right begins to push hard for privatizing Social Security and a

picture emerges of impoverished elderly people like those seen before Medicare

was phased in, in 1965.

 

 

 

Two years before, President Kennedy, quoting historian Arnold Toynbee, noted in

a special message to Congress that " a society's quality and durability can best

be measured 'by the respect and care given its elderly citizens.' " The Medicare

bill tells us how much has changed since Kennedy's time.

 

 

 

Trudy Lieberman is the director of the Center for Consumer Health Choices at

Consumers Union. Her latest book is " Slanting the Story: The Forces That Shape

the News " (New Press).

 

 

 

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