AMNews: Jan. 15, 2001. Bush faces Medicare reform challenges ... American Medical News

Bush faces Medicare reform challenges

The president-elect has vowed to make Medicare restructuring and an outpatient prescription drug benefit priorities, but differing views in Congress could hinder progress.

By Jane Cys, AMNews staff. Jan. 15, 2001. Additional information

Washington -- A new Republican president combined with fresh faces in Congress create opportunities to finally approve a Medicare prescription drug benefit and to overhaul the program's financing. But political observers caution that partisan differences will likely make reforms' road to passage a tough one.

"It will be a challenge, but it certainly could happen," said Gail Wilensky, PhD, a former administrator of the Health Care Financing Administration who provided health policy advice to the Bush campaign. "Both parties recognize changes are long overdue to Medicare. But along with intense interest, there are very different views."

President-elect George W. Bush made clear in a mid-December 2000 address to the nation that prescription drugs and Medicare reform are at the top of his administration's "to-do" list. He has also promised to work with both parties in an attempt to change the partisan tone of Congress.

Republican and Democratic congressional leaders sounded largely conciliatory messages following Bush's speech. However, political gamesmanship stemming from slim GOP majorities in both chambers and the parties' desires to retake or retain control of Congress in the next election may continue to block Medicare reform efforts.

Prescription for success?

During the campaign, Bush proposed expanding or creating state drug assistance programs as a way to get immediate relief to low-income seniors struggling to pay for their prescriptions. The plan, which hasn't received much support from the states, was estimated to cost $48 billion.

Bush has said that giving states money for drug assistance programs would give Congress time to create and enact a comprehensive Medicare reform plan that incorporates prescription drugs. Bush's proposed Medicare overhaul, which is estimated to cost $110 billion, relies on a private-sector approach that would give seniors a choice of plans offering expanded benefits.

But getting Medicare drug coverage through a sharply divided Congress won't be an easy task because of a variety of factors, including the focus that both parties will have on the next election, observers said.

"A lot depends on whether the Democrats decide they want to go forward as a party of cooperation or whether they want to frustrate the Republicans and be able to claim the Republicans blocked prescription drugs for the elderly," said David Blumenthal, MD, director of the Institute for Health Policy at the Massachusetts General Hospital and Partners HealthCare System in Boston.

Dr. Blumenthal also noted that many Republicans back a Medicare drug benefit, but only in conjunction with overall structural reform to the program -- a stance that makes it hard to move ahead on only the prescription drug issue.

"I think if the Republicans dropped the requirement for comprehensive reform, the two sides could probably come to some agreement on prescription drugs as long as the Democrats don't want to use it as an election issue in two years," he added.

Robert Reischauer, PhD, president of the Urban Institute, Washington, D.C., said there's a good chance that Congress may agree to split off a drug benefit from a Medicare overhaul plan for several reasons, including voters' desires to see action on the drug issue.

Physicians will continue to be concerned about the financing of any Medicare drug benefit proposal -- its use of federal monies and the adequacy of funding, said D. Ted Lewers, MD, chair of the AMA Board of Trustees.

"We can't permit the prescription medications to be handed over on the backs of hospitals and physicians," he said. "That's what's happened with a lot of the other, newer Medicare programs."

Despite the public's focus on prescription drugs, the real Medicare issue is financing high-quality health care for the next generation of retirees, said Robert Moffit, PhD, director of domestic policy studies at the Heritage Foundation, Washington, D.C.

The long-term view

Dr. Moffit noted that Bush doesn't have to start from scratch to develop a Medicare reform plan. The president-elect can build on the work already done by the National Bipartisan Commission on the Future of Medicare, which couldn't reach a consensus on a reform plan after President Clinton withheld his support for some of its proposals.

"It's going to be tough, but I think there's a big difference when a president is an advocate for a position than when a president is strongly opposed to a position," said Dr. Moffit. Bush's plan echoes many of the themes, such as adding competition and a private-sector element to Medicare, that the bipartisan commission considered and Clinton rejected.

The AMA's Dr. Lewers noted with interest that Bush had met with Sen. John Breaux (D, La.), a chair of the bipartisan Medicare commission. Although he doesn't know the details of their discussion, Dr. Lewers said the senator was the principal author of a Medicare reform plan that included a lot of AMA's policies.

Some think, however, that comprehensive Medicare reform is dead on arrival in Congress. "A larger overhaul of Medicare might be too politically hot to handle by Congress simply because both parties are going to be very worried about the 2002 elections, and so they'll be risk-averse and won't [address] contentious issues," Dr. Reischauer said.

He also predicted that once Bush advisers sit down to fill in the details of his reform plan, they'll find they can't accomplish what they've proposed within the budget they've outlined. The plan, Dr. Reischauer added, will need some fine-tuning.

Another potential block to Medicare reform is a healthier-than-expected bottom line for the program, Dr. Blumenthal noted. Because recent projections have pushed back the date of the program's insolvency, the sense that immediate action is needed has been removed. This means lawmakers may want to put off making politically difficult choices.

ADDITIONAL INFORMATION:

Bush's vision

During his campaign, President-elect George W. Bush laid out a proposal for Medicare reform that would:

Restructure Medicare so that beneficiaries would be able to choose from a menu of private health plan options that offer Medicare's basic benefits and a variety of extra benefits, including prescription drugs.
Help low- and moderate-income seniors pay their Medicare premiums.
Allow beneficiaries to remain in traditional Medicare.
Provide full government subsidies for beneficiaries with incomes below 135% of the federal poverty level to cover the cost of prescription drugs and major subsidies for those earning up to 175% of the poverty level. The government would pay 25% of premium costs for prescription drugs for all seniors.
Impose a $6,000 yearly limit on all beneficiaries' out-of-pocket drug expenses. Costs above that would be borne by the government.
Provide billions in immediate support to states to fund prescription drug benefits for poor beneficiaries.

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