Killing Medicare
http://www.thenation.com/doc.mhtml?i=20031215&s=lieberman
by TRUDY LIEBERMAN
[from the December 15, 2003 issue]
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--$224 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'être. The government will funnel money to the
insurance plans, which could 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--insured 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.
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