Lukewarm Reaction to Latest Bush Medicare Plan

Doctors, Insurers, Drug Companies Applaud

By James R. Hood
Caregivers USA News

March 10, 2003
President Bush's latest plan to overhaul Medicare drew a standing ovation when he described it to doctors attending an American Medical Association conference. But the applause was largely confined to the convention hall. Aging organizations, consumer groups, labor unions, Democrats and even many Republican members of Congress were less pleased.

The Leadership Council of Aging Organizations (LCAO), an umbrella group of more than 50 aging services groups, said it was "very disappointed" the president's plan did not provide funds for "meaningful, affordable prescription drug coverage for all seniors."

"Seniors don't want to leave Medicare. Seniors don't want to leave the doctors they trust," said George J. Kourpias, President of the Alliance for Retired Americans. "Seniors do want a prescription drug benefit under Medicare. Why is that so hard for this Administration to understand?"

On the other hand, several current and former lawmakers warned that Medicare will be in "perilous financial shape" in coming years if Congress adds a prescription drug benefit without fundamentally changing the program.

Medicare, Medicaid and Social Security will make up 50 percent of the federal budget in 10 years and former Sen. Bob Kerrey (D-Neb.) said that adding a prescription drug benefit would "just make the scenario worse." Kerrey was among those addressing a forum sponsored by the U.S. Chamber of Commerce.

"We have to bend the cost curve as the baby boomers retire," said Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Health Subcommittee, who also addressed the forum.

President Bush says he wants to offer seniors three broad choices in a revamped Medicare system:

1. Remain in the current system. Get an annual $600 subsidy to help pay for prescription drugs.
2. Opt for "an enhanced form of Medicare," providing more kinds of coverage while allowing patients to choose their primary doctors, specialists and hospitals.
3. Choose a private managed-care plan, including prescription-drug coverage. This plan, Bush said, would "keep out-of-pocket costs to a minimum."

The proposed new drug benefits would be available on Jan. 1, 2006, if Congress passes the legislation this year, the White House said. Until then, Bush proposes to issue a drug discount card to all seniors and provide an additional $600 annual subsidy to low-income seniors.

The discount card is "of very, very marginal value," Sen. Tom Caschle, (D-S.D.), the Senate minority leader, said. Sen. Ted Kennedy (D-Mass.) called the plan "deeply flawed."

Most Republicans were cautious in their comments. Among the more outspoken was Rep. W.J. "Billy" Tauzin (R-La.), chairman of the House Energy and Commerce Committee. "The bottom line," he said, "is that for those who don't want to even think about a choice, who want to stay in fee-for-service, you have to give them an adequate drug coverage."

John C. Rother, policy director of AARP, said the Bush Administration was at least moving in the direction of providing some kind of drug benefit to seniors who stay in the traditional plan but said he did not think most seniors would consider the new proposal adequate.

The Washington Post said the Bush plan would be "a bonanza for the pharmaceutical and managed-care industries, both of which are huge donors to Republicans."

Pharmaceutical manufacturers gave $30 million to Republicans and $8 million to Democrats in the last two elections, the Center for Responsive Politics reported. Health service companies and HMOs gave $10 million to Republicans and $5 million to Democrats.

The insurance industry left no doubt it was on board with the idea.

"Aetna would certainly be very interested in participating," said Dr. John W. Rowe, the chairman of Aetna. Karen Ignagni, president of the American Association of Health Plans, said the managed-care option would "stretch the dollars and improve the quality" for Medicare patients by emphasizing preventive care and generic drugs.

The Bush plan "strikes me as the kind of proposal the pharmaceutical companies would write if they were writing their own bill," said Bruce C. Vladeck, who headed the agency that runs Medicare in the Clinton Administration.

Vladeck said Bush's plan would be ineffective in holiday down the cost of prescription drugs.

Vladeck, who is now a health policy professor at Mount Sinai School of Medicine in New York, said private health plans would have "nowhere near" the negotiating power that Medicare would have if there was a national drug benefit for all Medicare beneficiaries.