January 30, 2003 -- Doubts emerging on Bush Medicare Plan


The government's plan to privatize Medicare by forcing recipients onto
government subsidized private managed care plans to get any drug
benefits is running into trouble.

Big problems are expected as 78 million about to become eligible for
Medicare, an additional cost of over 500 billion/yr, based on current
costs and benefits. Medicare currently costs $280 million/yr to cover
40 million. 85% of Medicare beneficiaries prefer the traditional
fee-for-service plan; the 6 million who opted for managed care
Medicare (Medicare+Choice) were disappointed by completely inadequate
drug benefits, and 2.4 million of these were later dropped by HMOs,
that were dissatisfied with the profits. Privatization is supposed to
reduce costs, but the watchdogs that have allowed Medicare overpayment
frauds were private insurance companies, so whatever money is saved
will come from huge cuts in patient care.

Government officials are now denying earlier plans, like charging
co-payments for home care, or a standard drug benefit where patients
would pay $275/year deductible, half the costs of drugs up
$3,000/year, all the costs beyond that, until costs reach $5,500,
beyond which patients would pat 10% of costs. (NY Times, 1-24-03)
http://www.nytimes.com/2003/01/24/national/24MEDI.html



New York Times, January 30, 2003

Doubts Are Emerging as Bush Pushes His Medicare Plan

By ROBERT PEAR with ELISABETH BUMILLER

WASHINGTON, Jan. 29 - With President Bush on the road promoting his
$400 billion plan to revamp Medicare, members of Congress from both
parties expressed doubts about its feasibility today, forcing
administration officials to reconsider important elements of the
package.

A day after his State of the Union speech, Mr. Bush traveled to
Michigan, a battleground state that he lost in the 2000 election, to
highlight his proposal. The plan would establish prescription drug
benefits under Medicare and encourage the elderly to join private
health plans.

The event, in Grand Rapids, had been billed as an exposition of Mr.
Bush's Medicare proposal, and he spoke in front of a backdrop
emblazoned with the slogan "Strengthening Medicare." But the president
said nothing new about his proposal. In fact, he spent just over three
minutes talking about Medicare and prescription drugs in a 40-minute
speech, devoted mostly to his tax cut proposals and warnings about
Iraq.

Administration officials said last week that Mr. Bush was considering
a proposal that would require Medicare beneficiaries to join some type
of government-subsidized private health insurance plan to obtain
coverage of prescription drugs.

Under the proposal, as described in government documents, drug
benefits would be available to elderly people who enrolled in private
plans, like health maintenance organizations and preferred provider
organizations, and there would be "no prescription drug coverage" for
people in traditional fee-for-service Medicare.

Since learning of the president's ideas on Friday, Democrats in
Congress and advocates for the elderly have accused the administration
of trying to privatize Medicare. Republican members of Congress said
today that they did not know enough about the proposal to support it.

But some Republicans said they were very concerned that Mr. Bush's
plan might not provide prescription drug coverage to Medicare
beneficiaries in the traditional fee-for-service program. Most of them
had not been able to get details of Mr. Bush's proposal.

"Prescription drug coverage should be available to all seniors, not
just those who switch into managed care," said Senator Charles E.
Grassley, Republican of Iowa.

Another Republican member of the Finance Committee, Senator Olympia J.
Snowe of Maine, said, "I am concerned that the president's focus on
ways to reform Medicare could hamper our efforts to pass comprehensive
prescription coverage."

Buffeted by harsh criticism from Democrats and doubts expressed by
Republicans, administration officials said today that they were
reconsidering some features of the proposal, or at least seeking some
way to clarify their intentions.

To get drug coverage, they said, Medicare beneficiaries might have to
enroll in private health plans, but many of the plans would allow
patients to select their own doctors, as they do now in the
traditional Medicare program.

More than 85 percent of the 40 million Medicare beneficiaries are in
the fee-for-service program, despite nearly a decade of federal
efforts to encourage enrollment in H.M.O.'s. Mr. Bush said today that
the traditional program was "stuck in the past" and encumbered with
"all kinds of bureaucracies."

Mr. Bush's press secretary, Ari Fleischer, dismissed criticism from
Democrats who said the president's proposal would force the elderly
into managed care plans.

"The president believes in choices and options," Mr. Fleischer said.
Mr. Bush often cites the Federal Employees Health Benefits Program as
a model for the competition he wants to see in Medicare.

The difficulties encountered by the Bush administration in the last
week are reminiscent of problems that Bill Clinton experienced when he
tried to remake the nation's health care system. Details of the
president's ideas touched off an uproar on Capitol Hill, forcing Mr.
Clinton to rejigger the proposal before announcing it.

Daniel T. Boston, a health care lobbyist with close ties to the
Republicans, said tonight: "Three powerful chairmen of Congressional
committees - Representatives Bill Thomas and Billy Tauzin and Senator
Chuck Grassley - have expressed concern about some features of the
Bush plan, and one can only imagine that this would lead the
administration to reconsider elements of its Medicare package."

Republican lawmakers said, with some frustration, that no one from the
administration had stepped forth in public to explain the president's
proposal or to answer its critics.

The House majority leader, Tom DeLay, said the critics were wrong to
suggest that Medicare beneficiaries would have to join H.M.O.'s to get
drug coverage.

"That's absolutely false," Mr. DeLay said. But his rebuttal was
revealing. "We're not even close to understanding what the president's
going to propose," said Mr. DeLay, a Texas Republican.

Many Republican members of Congress come from rural areas where few if
any private health plans are available to Medicare beneficiaries. Many
lawmakers from both parties are skittish about relying heavily on
private health plans because H.M.O.'s have abruptly pulled out of
their states, leaving Medicare beneficiaries to make other
arrangements for insurance.

Ms. Snowe said she would continue working with Mr. Grassley and
Senator John B. Breaux, Democrat of Louisiana, on a bill to offer drug
coverage to all beneficiaries, whether they are in private plans or
the fee-for-service program.

In the absence of action by Congress, President Bush in 2001 devised a
plan to endorse and promote the use of drug discount cards by Medicare
beneficiaries. A federal district judge blocked that program today,
ruling that the administration did not have the necessary statutory
authority.

The judge, Paul L. Friedman of the Federal District Court for the
District of Columbia, said it was "mind-boggling" for the
administration to suggest that existing laws provided legal authority
for a program with such big effects on beneficiaries and pharmacies.

When the administration announced its initiative in 2001, it said that
Medicare patients could use the cards to cut retail drug prices by 15
percent to 25 percent or more. In the first year, it said,
beneficiaries would save $1.2 billion to $1.6 billion.

But drugstores and pharmacists sued the government, saying the
discounts would come at their expense, with no contribution or subsidy
from the government or drug manufacturers.

Administration officials said today that Mr. Bush would soon send
Congress a detailed proposal for overhauling Medicare, and some of the
ideas might stir heated debate.

For example, many beneficiaries - especially those who use doctors'
services but not hospitals - would be required to pay higher
deductibles.

The government would charge a new co-payment for home health services,
tentatively set at $10 for each of the first five visits in a spell of
illness, up to $300 a year.