The History of Medicare and
The Current Debate
The Birth of Medicare
The Heritage Foundation Media Campaign
Leading Market-Driven Legislative Proposal
Instability in the Medicare HMO Marketplace
The New Medicare Law: A Victory for the Proponents of Privatization
Growing Power of Extremist Think Tanks
MRC’s Media Education Campaign
Passage of the Medicare Modernization Act Represents Victory for Proponents of Market-Driven Reforms of Medicare
In 2003 the market-driven reformers efforts paid off when Congress passed and the President signed into law the Medicare Modernization Act (MMA). Although the law does not include the most extreme elements of their agenda, it does include important parts. In fact, the privatizers were so successful at incorporating their vision into the law, that people are likely to look back on the law’s passage in 2003 as the beginning of a battle over the soul of the Medicare program.
In an attempt to expand the role of private plans in Medicare, the MMA includes large additional subsidies to encourage private plans to participate in the program. For the first time, the law creates a Medicare benefit that, in general, will not be available through Original Medicare. Under the new law, the only way people can get access to a drug benefit is by buying a policy offered by a private plan (unless there are no private plans available in their area). They will not have access to coverage, as they do with all other Medicare-covered services, through the Original program. This makes the benefit potentially unreliable and costly—since there is no guarantee that a private plan that offers coverage one year will offer it the next and no limit on the premiums that private plans can charge. In contrast, Original Medicare has never dropped a single enrollee, and it must limit what it charges in premiums to what Congress will allow.
Find out why the privatized Medicare drug benefit is a failure.
Finally, the MMA calls for an experiment, set to begin in 2010, with remodeling the Medicare program along the lines of Senators Breaux and Frist’s Premium Support proposal. Under this experiment, people with Medicare in selected regions of the country will no longer be guaranteed access to the Original Medicare program at a set price. Instead, the government will give them a voucher-like subsidy to purchase health insurance from private plans or the Original Medicare program. Under the Premium Support model, there is no guarantee that the value of the voucher will keep pace with the cost of good insurance.