Bush Administration Promotes Cost Savings Under Medicare Reform Plan
Bush administration officials yesterday said the president's Medicare reform proposal, which would increase participation of private health plans to provide prescription drug and medical coverage, would reduce federal expenditures for the program, the New York Times reports (Pear, New York Times, 6/3). Under Bush's Medicare reform framework, seniors would receive a choice of three coverage options beginning in 2006. First, seniors could remain in traditional fee-for-service Medicare, with access to prescription drug discount cards and catastrophic protection. Second, beneficiaries could enroll in "Enhanced Medicare," which would offer a choice of private plans that include prescription drug coverage. The third option, "Medicare Advantage," would be similar to the current Medicare+Choice program, which offers a selection of private health plans with and without prescription drug coverage. Low-income beneficiaries would receive additional premium and cost-sharing assistance. In the interim, all seniors would get immediate access to drug discount cards and protection against high out-of-pocket costs (California Healthline, 6/2). CMS Administrator Thomas Scully said private plans could provide Medicare beneficiaries with "better benefits and lower costs" (New York Times, 6/3). CMS officials yesterday released a report that estimates that making preferred provider organizations available to all Medicare beneficiaries would reduce expenditures by $22 billion over 10 years (Rovner, CongressDaily/AM, 6/3). The report, which examined 31 PPO plans in a Medicare demonstration project, says, "These savings would continue to grow over time. In addition, beneficiaries would receive better and more enhanced services including full coverage for preventive care" (Espo, AP/Las Vegas Sun, 6/2). The federal government anticipates spending $3.8 trillion on the program over 10 years, the Times reports. Scully said the potential savings depend on the administration's plan to offer less comprehensive drug benefits to beneficiaries who choose to remain in the fee-for-service option. According to Scully, if Medicare offered equal drug benefits for all beneficiaries, 31% of beneficiaries would join private plans. However, if Medicare offered "superior" drug benefits under private plans, 51% of beneficiaries would join private plans, creating greater savings (New York Times, 6/3).
A preliminary report by the Congressional Budget Office has concluded that if enacted, the Bush Medicare reform framework would increase program spending because Medicare would have to pay rates set by private health plans, which generally are higher than those set by Medicare, according to congressional staffers working on Medicare reform, CongressDaily/AM reports (CongressDaily/AM, 6/3). Senate Minority Leader Tom Daschle (D-S.D.) criticized Republican leaders claiming that private plans would be more efficient than traditional Medicare, saying that administrative costs for fee-for-service Medicare accounted for between 2% and 3% of spending, while such costs make up nearly 15% of spending in private plans. Bush administration officials said yesterday that private plans would incur higher administrative costs but added that private plans could manage care better and eliminate "wasteful or unnecessary spending." Scully said the CBO estimates are "fundamentally flawed." CBO officials refused to comment on Scully's remarks, and said their estimates are "preliminary and confidential," the Times reports (New York Times, 6/3).
Senate Majority Leader Bill Frist (R-Tenn.) yesterday outlined five "broad principles" to guide Congress' Medicare reform debate, CongressDaily/AM reports. In a floor statement, Frist said, "The Medicare system does not live up to the standards we've set in the private sector." Frist added that any Medicare reform legislation should:
- Be "patient-centered" to give beneficiaries "more security";
- Give beneficiaries more options, including the choice to remain in their current fee-for-service coverage;
- Include a "systems approach" to reduce medical errors and improve quality;
- Encourage innovation, including coverage for new procedures; and
- Reduce "bureaucracy and paperwork."
Meanwhile, Senate Republicans have begun considering a new Medicare reform proposal that would give beneficiaries prescription drug coverage, protection against health costs exceeding $6,000 per year and coverage for preventive care, according to material circulating through Congress, the AP/Las Vegas Sun reports. Under the proposal, which GOP officials described as "highly preliminary," Medicare beneficiaries would generally receive preventive health services at no charge and would be required to enroll in private health plans as called for in the Bush administration's Medicare reform framework, according to the AP/Sun. Under the preliminary plan, beneficiaries would pay a $400 annual deductible and $400 for each hospital admission. The documents do not provide details on the plan's monthly premium or the extent of prescription drug coverage. Beneficiaries enrolled in traditional Medicare currently do not receive coverage for preventive care (Espo, AP/Las Vegas Sun, 6/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.