07-20-2002

HEALTH: Remember `Catastrophic'

As the Senate this week bogged down on legislation providing a
prescription drug benefit to Medicare recipients, one important point was
mostly ignored: Congress approved such a plan in 1988, but the effort was
a fiasco. That failed attempt helps to explain why nothing has been
enacted since then.


In 1989, Congress and President George H.W. Bush took the unprecedented
action of repealing a package of new Medicare benefits that had been
enacted in July 1988. Officially named the Medicare Catastrophic Coverage
Act, the law was known as "catastrophic"-not because of the
legislative outcome, but because the plan was designed to cover the cost
of serious illnesses. Senior citizens were intensely unhappy with the law
because it included an income-based surtax, a financing mechanism that
President Reagan had demanded because of the large federal budget
deficit.


Although it was not widely discussed at the time, congressional Democrats
had added a Medicare-financed prescription drug benefit to the package.
The step was taken at the insistence of Rep. Claude Pepper, D-Fla., who
chaired the House Rules Committee and was an outspoken advocate for
seniors.


"Pepper said that he wouldn't bring the bill to the floor without a
prescription drug benefit," recalled Rep. Fortney H. "Pete"
Stark, D-Calif., who chaired the Ways and Means Health Subcommittee and
was the measure's chief author. Stark added that Pepper was "goaded
on" by Rep. Henry A. Waxman, D-Calif., who chaired the Energy and
Commerce Health and the Environment Subcommittee. The last-minute move in
the House left the pharmaceutical industry little time to rally
opposition, Stark said.


In interviews this week, Stark and Waxman-who were among the handful of
lawmakers who opposed the repeal of the 1988 law-acknowledged that the
surtax angered some seniors. "There was heavy cost sharing, which
seniors had to pay for," Waxman said. "But you have to achieve
what you can."


In early 1989, however, lawmakers were beginning to feel the heat of
grassroots opposition, which was stirred by the drug companies and some
seniors groups, to the new law. One vocal critic was Sen. John McCain,
R-Ariz., who sought to postpone much of the surtax. With Reagan out of
office and Pepper ill-he died in May 1989-the program suffered from the
loss of its high-profile patrons.


Then a turning point came in August 1989, when protesters confronted Ways
and Means Chairman Dan Rostenkowski, D-Ill., at a senior citizens center
in his Chicago district, where he was defending the new law. In an image
that was broadcast widely on television at the time-and that has gained
political infamy since then-Rostenkowski fled on foot down a street after
an angry woman protester climbed on the hood of his car.


"That event was pivotal," said Rep. Jan Schakowsky, D-Ill., who
helped to organize the protest as the then-executive director of the
Illinois State Council of Senior Citizens. "It made every member feel
vulnerable. If Dan Rostenkowski could be challenged in his own district,
then anyone could be." Schakowsky, who was elected to the House in a
neighboring district in 1998, added: "This was a lousy plan. And the
seniors knew it."


Another political veteran who is well positioned in the current debate is
former Rep. Barbara B. Kennelly, D-Conn. As a member of Ways and Means,
she urged repeal of the 1988 law the following year. "Because I'm
from Hartford, where we really know about the insurance business, I had a
unique take," Kennelly said in a recent interview. "The public
was up in arms with the tiered payment system.... We are a democracy. When
a member of Congress goes home and people say that they want a bill
repealed, that has clout."


Kennelly, who lost a gubernatorial bid in 1998, became president in April
of the National Committee to Preserve Social Security and Medicare. At a
Capitol Hill rally on July 16, she urged the Senate to adopt a broad
prescription drug benefits plan, based in Medicare, that most Democrats
advocate. She opposed the so-called "tripartisan" Senate
proposal, which has similarities to the GOP-sponsored bill that the House
passed last month; both rely more heavily on the private sector.


John Rother, AARP's director of policy and strategy, took some heat from
seniors when he steadfastly backed the 1988 law. In retrospect, he remains
an advocate of that program, but he concedes that proponents were
"too slow to react" to critics. Rother shares the widespread
pessimism among insiders that a prescription drug benefit will be enacted
this year, although he held out hope that "somebody could broker a
deal" in the Senate.


Given the several shifts in control of the White House and Congress since
1989, both parties share responsibility for the decade-plus of inaction on
prescription drug benefits. With the legislative discussion finally now
taking shape, it's more difficult for lawmakers to explain to seniors why
they still have no coverage for their medicine. But, once again, the
federal Treasury is bare.


Richard E. Cohen

National Journal