April 29, 2003 -- Crunch Time for Medicare Overhaul

It is important to remember that HMO's enrolled hundreds of thousands
of Medicare recipients into HMO-Medicare plans. The HMOs later
dropped about a third of them, claiming they could not make sufficient
profits, given the payments they got and the cost of supplying
healthcare with standard benefit packages. Why do HMOs think they can
profit off Medicare in the future? The Government certainly has no
intention on increasing its payments for Medicare. The only
plausible answer is that the government intends to drastically scale
back delivery of health care to Medicare recipients in the future,
especially as baby boomers reach retirement age.



LA Times, April 28, 2003

Crunch Time for Medicare Overhaul

For many seniors, the Bush administration's plan to modernize the huge
health-insurance program is seen as more threat than promise.

By Vicki Kemper Times Staff Writer


LANCASTER, Pa. - Voters in Pennsylvania's 16th Congressional District,
where the Amish travel in horse-drawn buggies and farms still function
without electricity, know a thing or two about change. For years,
they've watched sprawling outlet malls overtake rolling hills and
studied the brash efforts of neon-lighted hotels to attract the
tourists who arrive eager to experience the region's quiet - and
disappearing - old-fashioned ways.

So when the federal government's top Medicare official came to town
last week to talk up the Bush administration's plan to modernize the
mammoth, 38-year-old health-insurance program, Lancaster's seniors
were worried. Few were won over by Tom Scully's repeated descriptions
of the Medicare program as flawed, as "a 1965 insurance model" and "an
unbelievable disaster." "We think it is a dumb system," Scully,
administrator of the Centers for Medicare and Medicaid Services, told
an audience of health-care industry executives and seniors. "But if
seniors want it, they can keep it," he added, explaining that the
administration decided to keep traditional Medicare in its reform
proposal because "most seniors are scared of change" and the president
"didn't want to be accused of taking something away."

For Nicholas Gianopoulos, a survivor of World War II's Battle of the
Bulge, that was too much. "My experience with Medicare has not been
'dumb,'" the 79-year-old retired businessman told Scully. "It's been
pretty good. If there's flaws in the system let's ask Congress to
correct the flaws." The exchange highlights a central conflict facing
lawmakers as Congress begins working in earnest this week on Medicare
reform. For many seniors here and throughout the country, the
administration's plan to modernize Medicare is perceived as more
threat than promise.

Most seniors, and many Democrats, want nothing more than to add a
prescription drug benefit to the existing Medicare structure. It pays
the hospital, doctor, nursing home and other medical bills - expected
to total roughly $255 billion this year - of more than 40 million
senior and disabled Americans.

But the administration and most Republican lawmakers, who stress the
increasingly shaky finances of the program, say Medicare must be
overhauled if it is to survive the aging of the baby boom generation.
They want to remake Medicare in the image of private managed-care
plans, a structure they say will control spending and offer seniors
benefits such as drug coverage, disease management, preventive care
and a cap on hospitalization expenses. Before leaving Washington for
spring recess, the House and Senate agreed to set aside $400 billion
over 10 years - the amount President Bush requested - for Medicare
reform with prescription drug coverage. Some Democratic lawmakers say
a meaningful drug benefit would cost twice that much, while others
insist Congress should focus this year on providing drug coverage only
to Medicare beneficiaries with very low incomes or extremely high
medication expenses.

And while most Republicans are committed to reforming Medicare at the
same time they add some form of prescription drug coverage, the Bush
administration has given lawmakers nothing more than a general
framework. Even those Republicans who support the framework - a
three-tiered structure that offers the most generous drug benefits to
seniors who leave traditional Medicare for a managed-care plan or
HMO - disagree on many of the details. Despite more than 10 years of
talk, widespread agreement among politicians and growing public demand
for a prescription drug benefit, there is no guarantee Congress will
pass Medicare reform legislation this year.

"It's not at all a shoo-in that this is going to happen," Scully said
in Lancaster, where Rep. Joseph R. Pitts (R-Pa.) had invited him to
speak. It was Scully's second Medicare town meeting of the day and his
49th in two years. Given the party breakdown and the parliamentary
rules of both chambers, one possible outcome is a stalemate between a
House-passed Medicare reform plan and a Senate-passed bill that does
nothing but add drug coverage. It's an outcome top administration
officials are working hard to prevent.

"The drug benefit is the dessert," said Bill Pierce, spokesman for the
Department of Health and Human Services. "If you give them just
dessert, they won't come back for dinner." Many in Washington believe
the approaching 2004 election season means this year is Congress' last
chance to successfully tackle the issue for some time.

To push for action, Health and Human Services Secretary Tommy G.
Thompson has been meeting with members of key congressional committees
and talking by phone to lawmakers. Many of the conversations are
efforts to influence the language of the debate. Early on, Democrats
and other lawmakers characterized the Bush proposal as a way to
privatize Medicare and said seniors would be forced to leave their
longtime doctors. Administration officials vehemently reject that
argument. "For seniors on Medicare" now, Scully said, "nothing's going
to change. Change will happen so incrementally most people won't
notice it."

Conceding that no one knows how much a Medicare prescription drug
benefit will cost, Scully described the administration's proposed
"Enhanced Medicare" option - essentially a choice of preferred
provider organizations, or PPOs - as "the only model for delivery of a
drug benefit that works." Medicare beneficiaries used $87 billion in
outpatient prescription drugs last year, according to the
Congressional Budget Office, and that figure is expected to increase
to $128 billion by 2005. The budget office projected that, on average,
a Medicare beneficiary would use $2,440 worth of prescription
medications this year. Among the options lawmakers are considering for
seniors who stay in the traditional Medicare program is full coverage
of all prescription drug costs in excess of $4,000 or $5,000 a year.

The dynamics of the Lancaster event also highlighted other obstacles
to Medicare reforms. Physicians, nursing-home executives, nurses and
other health-care providers dominated the question-and-answer period
with complaints about Medicare payment formulas. "The individual
players in the delivery of health care are each concerned about
protecting their own turf," said Gianopoulos, the World War II veteran
who attended the session. Gianopoulos is among the 73% of Medicare
beneficiaries who have limited drug coverage, either through a
supplemental Medigap policy, retiree health benefits or a Medicare
HMO. But those options are drying up - a result of corporations
cutting back on retiree benefits, HMOs limiting coverage or personal
finances.

"But many seniors can no longer afford Medigap," said Gianopoulos, a
Republican who uses his accounting skills to help seniors do their
taxes. "They just drop it, and Medicare is all they have." Yet
seniors' need for prescription drug coverage - which started the whole
Medicare reform debate - sometimes gets lost in the discussion of plan
options and structural details.

One woman, who would identify herself only as a Lancaster resident,
came to the forum wanting to hear about the prospects for a Medicare
drug benefit. Dressed in a mauve pantsuit, she sat with pen and paper
in hand. After listening to 90 minutes of often technical talk about
Medicare payments to doctors and nursing homes, she left early, deeply
disappointed. Bethlehem Steel, her husband's former employer, had
recently dropped the couple from its supplemental health-insurance
policy. Now she and her husband, who has Parkinson's disease, do not
have any drug coverage. "We're going to have to dip into our savings"
to pay for medicine, she said, her eyes tearing up. And then she asked
her friend to take her home.