On the Horizon
No Rest for the Weary—Medicare Debates Continue in 2005
By Robert Hayes, MRC News, Summer 2004
Lurking behind the war in Iraq, terrorism and the U.S. economy this election year is a sleeping political minefield—the continuing partisan battle around the Bush Administration’s campaign to change Medicare.
Last December President Bush signed into law the 700-page “Medicare Modernization Act” that squeaked through Congress with heavy Republican support and angry Democratic recriminations.
The headlines that followed enactment of the legislation focused on the introduction of a new prescription drug benefit set for 2006. But angry protests greeted the heavy subsidies paid to the insurance industry and the explicit ban on negotiating lower drug prices with pharmaceutical companies.
Half a year later, the debate continues.
For nearly 40 years, Medicare has been a national treasure. Before President Lyndon Johnson signed Medicare into law in 1965, older Americans struck with illness faced near-certain poverty. With a stroke of the presidential pen, and a national commitment to human decency, that changed.
Medicare provides basic health coverage to 35 million Americans aged 65 and older. It also covers an additional six million men and women under age 65 who have severe disabilities. Both of these groups have been largely uninsurable in the private marketplace: Medicare offers them reliable and affordable health coverage. And it does so with remarkable efficiencies.
So when Congress bellied up last year to address the major missing benefit in Medicare—coverage of some part of the cost of prescription drugs—leaders of both parties saw a political and humanitarian opportunity. What began as a bipartisan mission to cover prescription drugs became a corporate feeding frenzy that could well undermine Medicare just as the boomer generation begins to reach retirement age.
Some good is emerging from the $554 billion legislation. Beginning this summer, very low income people (individuals with incomes below $12,569 a year) with no drug coverage can qualify for up to $1,200 to spend on prescription medicines ($600 in 2004 and another $600 in 2005). Some people with Medicare may find small savings in the privately sponsored discount cards that are part of the build-up to the 2006 benefit.
But the meager benefit, combined with the bizarre complexity of a program that forces choices among at least 39 different Medicare-approved discount cards, is angering older Americans.
And the deference paid to the insurance companies, the drug companies and the pharmacy benefit managers by the legislation adds fuel to the debate over who are the true beneficiaries of the law—people with Medicare or these politically powerful companies.
As the nation gears up for this November’s elections, key issues must be addressed. They will be center stage when the new Congress convenes in January.
One, Congress expressly prohibited the government—now committing hundreds of billions of dollars into a drug purchasing program—from negotiating for lower prices from the sellers of the drugs—the multinational pharmaceutical companies. This raises the profile of a long-standing scandal: U.S. consumers pay double what consumers in most other industrialized countries pay for the same prescription drugs.
Two, Congress and the Bush Administration are throwing billions of dollars in excess subsidies to private insurers that operate HMOs to lure people with traditional fee-for-service Medicare into a privatized version of Medicare. Rather than forcing private, for-profit insurers to challenge Medicare on a level playing field, the law props up the insurance companies with surplus funds and calls it “competition.”
Medicare is a political hornet’s nest today. Politics will determine whether the next Congress fixes a law that wastes billions of dollars, and still leaves older Americans far short of the comprehensive and reliable drug benefit that they so badly need and deserve.