Into the Medicare Maw

Physician's Money DigestMarch31 2003
Volume 10
Issue 6

President Bush deserves 2 cheers forthe Medicare proposal he finallyunveiled. The question now is whetherhis ideas can survive in any recognizableform as they enter the maw of Congress.

After a month of attacks on his planto link a prescription drug benefit toMedicare reform, Bush stuck to most ofhis principles. His main concession is thatseniors who elect to remain in traditionalfee-for-service Medicare would now getsome help with prescription drugs. Thiswould be in the form of a discount cardand "catastrophic" coverage for costsincurred above an unspecified amount.

But the president is still sticking to hispro-reform goal. In that spirit, he isproposing to offer far better drug coverageto those who elect a new "EnhancedMedicare" option that would be run bythe private sector and operate like a preferred-provider doctor network.

As a third alternative, Medicare PlusChoice (the current drug-inclusive HMOoption) would be renamed MedicareAdvantage. The beneficiaries of bothMedicare Advantage and EnhancedMedicare would also have real catastrophiccoverage for things like hospitalstays; traditional Medicare now leavesseniors with unlimited liability for suchservices. In short, the incentives forseniors to sign up for Medicare reformwould be preserved.

The plan unveiled yesterday was inmany ways an improvement on themuch-criticized draft that leaked inJanuary. Gone, for example, is the ideathat the number of Enhanced Medicareproviders would be limited to 3 perregion of the country; this would haveturned an ostensibly market-basedreform into something akin to the DefenseDepartment procurement process.

"The more the merrier," Health andHuman Services Secretary TommyThompson told us yesterday, stressingthat the president wanted the system tolook like the Federal Employees HealthBenefits Program (FEHBP). And EnhancedMedicare would be run by anentirely new office, hopefully modeledon the FEHBP's Office of PersonnelManagement, not the dysfunctionalbureaucracy of the Centers for Medicareand Medicaid Services.

But the devil will be in the details, andCongress is full of, well, you understand.We're not too worried about theDemocrats here. Voters last Novemberclearly saw their proposals for zeroreform and a $400-billion to $600-billionadd-on Medicare drug benefit as unrealistic.Now utterly removed from responsibilityin the minority, Tom Daschle andNancy Pelosi are talking about an $800-billion to $1-trillion add-on. It ought tobe easy to make the case that this megabenefit would subsidize retired rich peopleat the expense of taxpaying workingfamilies. Ted Kennedy is already a bigenough burden on taxpayers.

What worries us are the Republicanswho've been sniping from the sidelinesfor the past month. House Energy andCommerce Chairman Billy Tauzin addedhis voice to that chorus this week,grousing that his committee "almostcertainly will want a strong and adequateprescription drug benefit withinfee-for-service."

New York Times

Meanwhile, Senate Finance ChairmanChuck Grassley is hard to distinguishfrom Daschle. The drug benefits in traditionalMedicare and the private plansshould be "of equal value," he told the, which is another way ofsaying that reform is too much heavy liftingfor him. Grassley is all about fiscalrectitude when there's a tax cut at issue,but not when there's a massive new entitlementon the table. Bill Frist will haveto provide adult supervision.

The Beltway pros all think Medicarereform is too much for Republicans tohandle in this Congress, and maybethey're right. But the basic ideas here areboth bold and sound, and they offerhope of a Medicare system that will beable to absorb the Baby Boomers as theyretire. Once the war's over, we hopeBush will be willing to spend the politicalcapital the proposal deserves.

Reprinted with permission of the Wall StreetJournal copyright 2003 Dow Jones &Company, Inc. All rights reserved.

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