Medicare Steamroller

In a few short days, the promise of a Medicare drug benefit has been transformed from a political football into a steamroller. With both Democrats and Republicans now in agreement, passage of legislation in both the House and Senate now appears likely before July 4.

The Senate Finance Committee is meeting today to consider the Medicare prescription drug plan that Republican Chairman Chuck Grassley and Ranking Democrat Max Baucus have forged. At least 138 potential amendments have been filed so details aren’t yet final.

But several things are clear:



  • The bill is based upon bad policy. Grassley and Baucus insisted that those on traditional Medicare must get a drug benefit equal to those joining the new market-based option. That violates President Bush’s important principle – which the entire free-market policy community supports – that a new drug benefit should be a carrot to encourage seniors to join modern health plans that can provide better benefits.


  • Lawmakers made themselves insurance actuaries and wrote up the free-standing drug policy. Not surprisingly, it’s complicated and not senior-friendly. Nonetheless, at least two private drug plans must agree to offer this coverage in each region. If they don’t, the government would offer a fallback plan. This fallback is straight from the Kennedy-Daschle playbook – a government-run drug benefit that’s run much like the rest of Medicare – with government inevitably fixing prices and deciding what drugs will be covered.


  • For seniors hoping the new market-based plans will be an option, they should note they will be paid based upon the flawed fixed government payment system that has driven Medicare HMOs out of business and is forcing more and more doctors to refuse to see patients on traditional Medicare.


  • The requirement that the government pick the ?three lowest bidders? in a region turns health care into a bargain-basement commodity.

There is a chance to make some improvements with amendments, and we will be working hard on ideas to help. And anything can happen when the House and Senate bills go to conference committee later this summer.

The Medicare director during the Clinton administration, Nancy-Ann DeParle, says in a column in today’s Washington Post that if President Bush signs this bill, ?he will preside over the biggest expansion of government health benefits since the Great Society.? And she means this as a positive statement, encouraging Democrats to ?speed the way? for the bill and fix its gaps later.

The Wall Street Journal observed that Sen. Ted Kennedy is supporting the bill because ?we’ll expand it over a period of time.? The drug benefit is complicated and contains the dreaded doughnut hole, which liberals will try to fill – with more taxpayer dollars – as soon as they can.

Amazingly, the Washington Post editorialized today against the proposal, calling it ?a mishmash? and urging lawmakers to go ?back to the drawing board.?

But there’s little chance of that.

Ways and Means Chairman Bill Thomas is expected to make legislative language for his Medicare proposal available today, with House floor action also likely before July 4. There’s expectation that the Thomas bill contains more actual reforms of the program and some hope that some changes to the Senate plan could be made in conference to make the private plans viable and rescue the free-market option.

As lawmakers proceed, they should be reminded of what happened the last time Congress passed a drug benefit for Medicare in 1988 as part of a bill to provide catastrophic coverage for Medicare. The legislation was already on the books when seniors began to learn the details and they rebelled, beating with their umbrellas on the car of the author, then Ways and Means Chairman Dan Rostenkowski. The legislation was repealed a year later.

Please, no instant replays.

Grace-Marie Turner




Grace-Marie Turner is president of the Galen Institute, a not-for-profit research organization focusing on ideas to promote free-market health reform. She can be reached at P.O. Box 19080, Alexandria, VA, 22320.

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In a few short days, the promise of a Medicare drug benefit has been transformed from a political football into a steamroller. With both Democrats and Republicans now in agreement, passage of legislation in both the House and Senate now appears likely before July 4.

The Senate Finance Committee is meeting today to consider the Medicare prescription drug plan that Republican Chairman Chuck Grassley and Ranking Democrat Max Baucus have forged. At least 138 potential amendments have been filed so details aren’t yet final.

But several things are clear:



  • The bill is based upon bad policy. Grassley and Baucus insisted that those on traditional Medicare must get a drug benefit equal to those joining the new market-based option. That violates President Bush’s important principle – which the entire free-market policy community supports – that a new drug benefit should be a carrot to encourage seniors to join modern health plans that can provide better benefits.


  • Lawmakers made themselves insurance actuaries and wrote up the free-standing drug policy. Not surprisingly, it’s complicated and not senior-friendly. Nonetheless, at least two private drug plans must agree to offer this coverage in each region. If they don’t, the government would offer a fallback plan. This fallback is straight from the Kennedy-Daschle playbook – a government-run drug benefit that’s run much like the rest of Medicare – with government inevitably fixing prices and deciding what drugs will be covered.


  • For seniors hoping the new market-based plans will be an option, they should note they will be paid based upon the flawed fixed government payment system that has driven Medicare HMOs out of business and is forcing more and more doctors to refuse to see patients on traditional Medicare.


  • The requirement that the government pick the ?three lowest bidders? in a region turns health care into a bargain-basement commodity.

There is a chance to make some improvements with amendments, and we will be working hard on ideas to help. And anything can happen when the House and Senate bills go to conference committee later this summer.

The Medicare director during the Clinton administration, Nancy-Ann DeParle, says in a column in today’s Washington Post that if President Bush signs this bill, ?he will preside over the biggest expansion of government health benefits since the Great Society.? And she means this as a positive statement, encouraging Democrats to ?speed the way? for the bill and fix its gaps later.

The Wall Street Journal observed that Sen. Ted Kennedy is supporting the bill because ?we’ll expand it over a period of time.? The drug benefit is complicated and contains the dreaded doughnut hole, which liberals will try to fill – with more taxpayer dollars – as soon as they can.

Amazingly, the Washington Post editorialized today against the proposal, calling it ?a mishmash? and urging lawmakers to go ?back to the drawing board.?

But there’s little chance of that.

Ways and Means Chairman Bill Thomas is expected to make legislative language for his Medicare proposal available today, with House floor action also likely before July 4. There’s expectation that the Thomas bill contains more actual reforms of the program and some hope that some changes to the Senate plan could be made in conference to make the private plans viable and rescue the free-market option.

As lawmakers proceed, they should be reminded of what happened the last time Congress passed a drug benefit for Medicare in 1988 as part of a bill to provide catastrophic coverage for Medicare. The legislation was already on the books when seniors began to learn the details and they rebelled, beating with their umbrellas on the car of the author, then Ways and Means Chairman Dan Rostenkowski. The legislation was repealed a year later.

Please, no instant replays.

Grace-Marie Turner




Grace-Marie Turner is president of the Galen Institute, a not-for-profit research organization focusing on ideas to promote free-market health reform. She can be reached at P.O. Box 19080, Alexandria, VA, 22320.

SHARE THIS ARTICLE

About the author