Kick-Starting the Medicare Debate

Members of Congress are fanning out across the nation this month, with many planning town hall meetings to gauge their constituents’ sentiments on the hot domestic policy issues they will face when they return – especially Medicare and prescription drugs.

The high stakes debate over a drug benefit will be dominated by a closely-divided and politically-motivated Congress.

Congressional leaders and the White House hope that action on a drug benefit can be completed this summer before the Democratic presidential primary season kicks into full gear in the fall.

Congress put $400 billion aside over 10 years to pay for improvements to Medicare, including a drug benefit, during recent budget negotiations.

There is, however, there is little consensus on how the money should be spent.



  • Moderate Democrats, like Sen. John Breaux of Louisiana, are highly supportive of President Bush’s idea to allow Medicare beneficiaries to select from among competing private health plans that offer comprehensive health benefits, including prescription drug coverage.


  • Others, like Sen. Ted Kennedy of Massachusetts, prefer a drug benefit that would be run like the rest of Medicare – with government setting prices and determining what drugs are allowed. They argue that Medicare is a great program and its only problem is lack of a drug benefit. The estimated cost of their bill is more than $800 billion.


  • Republicans in the House, led by Ways and Means Chairman Bill Thomas of California, agree with the president’s approach and want to incorporate private-sector competition and choice into the program while adding a drug benefit for the budgeted $400 billion. However, many rank-and-file members are worried about too many changes lest they open themselves up to “Medi-scare” accusations.


  • Finally, others from both sides of the aisle are putting together fall back plans that would provide up-front subsidies for lower-income seniors to buy drugs, coupled with catastrophic coverage for all seniors.

The last two Congresses have tried but failed to enact drug legislation, and there is less than a 50-50 chance that this one will succeed, despite having a president and leaders in both houses of Congress who desperately want a benefit.

While seniors put a drug benefit at the top of their political priority list, there is some incentive for those challenging President Bush for the White House to keep the issue alive during the 2004 elections.

The debate so far this year has not gone smoothly. It began with Bush’s bold call in January to modernize the program. He wants to let seniors stay with the current program or choose from among multiple private plans that would cover preventive services and a broader range of health services, including prescription drugs. There would be special subsidies for lower-income beneficiaries.

But the White House didn’t announce the details right away and opened the proposal to critics who wrongly have said it planned to push seniors into HMOs to get drug coverage.

The White House eventually provided details that proved the critics wrong, but the issue instantly faded from the front pages as the nation and the world were gripped with coverage of war in Iraq.

Despite the political rhetoric, action still is imperative. The agency that runs Medicare – the Centers for Medicare and Medicaid Services – says the program currently covers only about half of beneficiaries’ total health costs – substandard compared to private health plans. More than 9 out of 10 beneficiaries have supplementary coverage to fill the holes in Medicare’s coverage.

Further, Medicare is burdened by price controls and crushing paperwork that are causing more and more doctors to refuse new patients. And new technologies are delayed long beyond the time they are adopted by private plans

Despite this, Medicare is gobbling up a bigger and bigger share of taxpayer dollars. Without changes, future generations of taxpayers will have to shoulder a crushing financial burden. And for all that spending, Medicare patients will find their access to health services severely limited.

The president’s new challenge will be to convince Congress to modernize the program and not go down the tired and beaten path of more of the heavy-handed regulation that burdens the program today.

As the fierce Medicare debate unfolds, he must stick to his key principle to put patients and doctors back in charge of American medicine and reform Medicare in way that preserves a free and competitive market for health care.

Grace-Marie Turner




Grace-Marie Turner is president of the Galen Institute, a not-for-profit research organization focusing on market-based health policy ideas. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or galen@galen.org

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Members of Congress are fanning out across the nation this month, with many planning town hall meetings to gauge their constituents’ sentiments on the hot domestic policy issues they will face when they return – especially Medicare and prescription drugs.

The high stakes debate over a drug benefit will be dominated by a closely-divided and politically-motivated Congress.

Congressional leaders and the White House hope that action on a drug benefit can be completed this summer before the Democratic presidential primary season kicks into full gear in the fall.

Congress put $400 billion aside over 10 years to pay for improvements to Medicare, including a drug benefit, during recent budget negotiations.

There is, however, there is little consensus on how the money should be spent.



  • Moderate Democrats, like Sen. John Breaux of Louisiana, are highly supportive of President Bush’s idea to allow Medicare beneficiaries to select from among competing private health plans that offer comprehensive health benefits, including prescription drug coverage.


  • Others, like Sen. Ted Kennedy of Massachusetts, prefer a drug benefit that would be run like the rest of Medicare – with government setting prices and determining what drugs are allowed. They argue that Medicare is a great program and its only problem is lack of a drug benefit. The estimated cost of their bill is more than $800 billion.


  • Republicans in the House, led by Ways and Means Chairman Bill Thomas of California, agree with the president’s approach and want to incorporate private-sector competition and choice into the program while adding a drug benefit for the budgeted $400 billion. However, many rank-and-file members are worried about too many changes lest they open themselves up to “Medi-scare” accusations.


  • Finally, others from both sides of the aisle are putting together fall back plans that would provide up-front subsidies for lower-income seniors to buy drugs, coupled with catastrophic coverage for all seniors.

The last two Congresses have tried but failed to enact drug legislation, and there is less than a 50-50 chance that this one will succeed, despite having a president and leaders in both houses of Congress who desperately want a benefit.

While seniors put a drug benefit at the top of their political priority list, there is some incentive for those challenging President Bush for the White House to keep the issue alive during the 2004 elections.

The debate so far this year has not gone smoothly. It began with Bush’s bold call in January to modernize the program. He wants to let seniors stay with the current program or choose from among multiple private plans that would cover preventive services and a broader range of health services, including prescription drugs. There would be special subsidies for lower-income beneficiaries.

But the White House didn’t announce the details right away and opened the proposal to critics who wrongly have said it planned to push seniors into HMOs to get drug coverage.

The White House eventually provided details that proved the critics wrong, but the issue instantly faded from the front pages as the nation and the world were gripped with coverage of war in Iraq.

Despite the political rhetoric, action still is imperative. The agency that runs Medicare – the Centers for Medicare and Medicaid Services – says the program currently covers only about half of beneficiaries’ total health costs – substandard compared to private health plans. More than 9 out of 10 beneficiaries have supplementary coverage to fill the holes in Medicare’s coverage.

Further, Medicare is burdened by price controls and crushing paperwork that are causing more and more doctors to refuse new patients. And new technologies are delayed long beyond the time they are adopted by private plans

Despite this, Medicare is gobbling up a bigger and bigger share of taxpayer dollars. Without changes, future generations of taxpayers will have to shoulder a crushing financial burden. And for all that spending, Medicare patients will find their access to health services severely limited.

The president’s new challenge will be to convince Congress to modernize the program and not go down the tired and beaten path of more of the heavy-handed regulation that burdens the program today.

As the fierce Medicare debate unfolds, he must stick to his key principle to put patients and doctors back in charge of American medicine and reform Medicare in way that preserves a free and competitive market for health care.

Grace-Marie Turner




Grace-Marie Turner is president of the Galen Institute, a not-for-profit research organization focusing on market-based health policy ideas. She can be reached at P.O. Box 19080, Alexandria, VA 22320 or galen@galen.org

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About the author