Bush Ties Medicare Drug Benefit to Managed Care

By James R. Hood
Caregivers-USA News

January 25, 2003
In his State of the Union address Tuesday, President Bush is expected to do what seniors' groups have been asking for -- propose a plan that would include a prescription drug benefit in Medicare. But the story doesn't end there; there's a hefty price tag attached.

Bush is expected to propose that seniors would have to give up their traditional fee-for-service Medicare plan and enter into some kind of managed-care plan offered by private sector companies. Those who agreed to enroll in a health maintenance organization (HMO) or preferred provider organization (PPO) would get some kind of prescription coverage. Those who stayed in traditional Medicare would get no prescription drug coverage.

Most Republicans in Congress agree with the President that there should be more private involvement in Medicare. But many are nervous about Bush's plan, fearing it will meet with fierce resistance from aging organizations.

Early Response

Early response from Democrats and aging advocates has indeed been critical.

• John C. Rother, policy director, AARP said: "Drug benefits must be available to all beneficiaries, including those who want to stay in the traditional medicare program. We don't contend that the benefit has to be exactly the same for everyone, and we can understand using more generous drug benefits as a carrot to induce people to join a new Medicare program. (But) we feel strongly that there needs to be a drug benefit for everyone regardless of which part of the system they're in."
• Edward F. Coyle, Executive Director, Alliance for Retired Americans: "The President's plan represents an all out assault on the current Medicare program. Although the President is sure to deny that the plan forces older Americans to leave the traditional fee-for-service Medicare to join a private plan, in actual fact, that is the end result he is seeking to achieve. This plan is just another unscrupulous attempt to dismantle the Medicare program."
• Senate Minority Leader Tom Daschle (D-S.D.): "It's exactly the opposite of what seniors want and need. The President should go back to the drawing board, scrap his HMO drug plan and write a Medicare drug plan."
• Sen. Edward Kennedy (D-Mass.), ranking Democrat on the Senate Health, Education and Labor Committee: "... a blatant move to privatize Medicare for the benefit of HMOs and powerful insurance companies -- not patients,"

Mystery on the Hill

The secretive Bush White House has shared few details of its plan to revamp Medicare with Congressional leaders. Even influential Republicans with a long interest in Medicare are in the dark.

• Senate Majority Leader Bill Frist (R-Tenn.), who has long advocated overhauling Medicare, is said to be reserving judgment until the learns more.
• Rep. Bill Thomas (R-Calif.), a Medicare expert who chairs the Ways and Means Committee, has been briefed on the plan but has given no sign of how he feels about it.
• Sen. Charles E. Grassley (R-Iowa), who chairs the Senate Finance Committee, issued a statement saying he welcomed the plan adn would consider "all options." But the statement pointedly omitted any praise of the White House plan.
• Sen. Olympia J. Snowe (R-Maine) said through a spokesman that she "clearly would have concerns" about requiring seniors to go into a managed care plan in order to get prescription drug coverage.
• Sen. John Breaux (D-La.) is one of the few Democrats who favors partial privatization of Medicare. But he hasn't been consulted at all by the White House. "We don't know what it is exactly," a spokesman told The Washington Post.

Administration sources said the Bush plan would be phased in over a number of years on a schedule that would be determined at least partly by how many private insurers could be persuaded to take part. Bush is expected to recommend an interim plan that would provide a drug benefit for elderly people with low incomes. The end result would most likely be that for an indeterminate period, most seniors would continue to pay for their own prescription medications.

There's some question about how eager seniors would be to abandon Medicare for the uncertainties of managed care. Indeed, Medicare+Choice, an earlier attempt to lure seniors into managed care, has had only limited success since its creation in 1997. Currently, only about 5 million of Medicare's 40 million beneficiaries, are enrolled in Medicare+Choice, largely because so many companies have dropped out, claiming that Medicare was not paying them enough.

The Bush plan, like others before it, relies on the theory that injecting competition into the marketplace will force costs down. Critics say such ideology is unrealistic in a marketplace that by definition consists entirely of older people, who have many more chronic health problems than younger people.