On the Horizon
Prescription Drugs—A Private Insurer-Administered Benefit or a Benefit within Traditional Medicare?
By Robert Hayes, MRC News, Winter 2003
As the 108th Congress rolls into Washington this January, the question looms: will this be the Congress that finally enacts a drug benefit for people with Medicare?
Consumers of health care have reason to be skeptical. There is a widespread fear that overwhelming, bi-partisan popular support for the drug benefit will be hijacked by the powerful pharmaceutical companies that plowed tens of millions of dollars into the 2002 Congressional campaigns.
Following the election, pharmaceutical CEOs huddled together at a country retreat to plot how to exploit their electoral successes. Their worst fear is that Medicare's huge buying power will force lower retail prices if Congress enacts Medicare coverage of prescription drugs.
Some consumers fear action by this Congress could prove worse than the paralysis of the previous one. How? By passing a drug benefit in name only that will take years to take effect, will turn Medicare into a Darwinian marketplace and will do little, if anything, to make prescription drugs affordable to middle-income Americans.
This is important stuff. It really is life or death for many elderly and disabled Americans. Here at the Medicare Rights Center, tens of thousands of men and women call our counseling hotlines each year and the most common plea is for assistance in securing affordable medication.
One recent caller who lives on Social Security has prescription drug costs of over $3,500 a year. To make her medication last, against medical advice, she takes her pills only every other day, buys the cheapest foods, and depends on her daughter to buy her shoes. There is nothing dramatic about the call: it is routine.
Last summer, the House of Representatives passed a bill that died in the Senate. That bill promised a modest drug benefit that would be managed exclusively by private insurance companies and deferred the start-up of any benefit for two and a half years.
Senate Democrats, along with most consumer groups, opposed that bill largely because it centered around the Republican push to privatize Medicare by relying exclusively on people buying prescription drug coverage from private insurance companies.
The opposition was largely based on the fact that efforts to offer health care through private Medicare HMOs has been largely unsuccessful, with premiums rising, benefits decreasing and plans leaving Medicare altogether.
Even insurance company representatives, including the Health Insurance Association of America, cautioned against relying on private insurance companies to provide prescription drug coverage. Remember, insurance companies make their money when people do not utilize their coverage. Since frailer, older and sicker people are more likely to use health care and need medication, insurers-necessarily driven by profit, not kindness-inevitably try to insure relatively stronger, younger, healthier people.
That being said, the political reality is that the new Republican majorities in Congress are not going to pass a drug benefit that does not include a key role for private, profit-making insurers. Republicans say the point of turning to private insurers is to give people with Medicare a choice of plans and to allow market forces to trigger better, cheaper benefits through competition.
On behalf of people with Medicare desperate for relief, perhaps it's time to give them a choice of prescription plans akin to their health plan choices. The status quo is killing them. Literally.
Let's support a private insurer-administered benefit along with a comparable drug benefit within traditional Medicare that consumers could choose. Let the public compete with the private.
If privatization works, as Republicans expect, consumers will flock to those drug plans by choice. If privatization fails, as Democrats predict, people with Medicare will have a drug benefit within the reliable Medicare system.
The difficulty, of course, will be to construct a level competitive playing field. That is no easy task. But if that is done, let the best plan win.
That would insure that people with Medicare, and all of us who care about civilized public policy, will win.