Bush Expected To Announce Medicare Reforms Designed To Foster Competition

President Bush plans to propose "sweeping, long-term changes" to Medicare later this month, according to administration officials, the New York Times reports. Officials are still drafting the details, but Bush reportedly wants to encourage competition between traditional fee-for-service Medicare and private health plans. Such changes are expected to keep costs down, but administration officials have not yet made "firm estimates" on the possible savings. Bush's expected proposals are likely to mirror plans advocated by incoming Senate Majority Leader Bill Frist (R-Tenn.), who has pushed for Medicare reforms over the past three years. The Times reports that Frist's long-term interest in Medicare will allow him to "explain and defend" the administration's proposals. Under one possible proposal, the administration would encourage beneficiaries to enroll in "more efficient, less costly, [private] health plans," the Times reports. Under that proposal, beneficiaries would receive cash rebates or lower premiums if the health plans keep costs down. However, if traditional fee-for-service Medicare produces more savings than the private plans, participants in that program would benefit. Bush reportedly would offer private health plans, many of which have said that Medicare payments are not enough to cover their costs, additional funds to encourage them to remain in the program.

Under another plan, Medicare would offer beneficiaries more services, including a cap on out-of-pocket costs, in exchange for higher premiums. The Times reports that Bush and Frist often cite the Federal Employees Health Benefits Program as a "model" for Medicare. Under that program, the government contributes a set amount per employee, and individuals who want more expensive plans pay more. However, Vicki Gottlich, a lawyer with the Center for Medicare Advocacy, said that such a model would not work for Medicare beneficiaries because "it could shift costs to individual beneficiaries so that people with the greatest medical needs pay the most for their health care."

Bush also is expected to advocate adding a prescription drug benefit to Medicare. The administration reportedly is considering proposals that would either encourage Medicare beneficiaries to enroll in HMOs or in a new fee-for-service program that would give them access to a drug benefit. This new fee-for-service program, which would likely have higher premiums and copayments than other plans, would likely offer more extensive coverage of preventive services, such as colon cancer screenings and mammograms, the Times reports. According to an administration official, Bush agrees with Frist that "drug coverage must be part of comprehensive Medicare reform," the Times reports. Congress eventually could compromise on a Medicare drug benefit, but reaching a consensus on altering Medicare's overall structure seems more unlikely, the Times reports. Congressional Republicans have "welcomed" Bush's leadership on the prescription drug issue, but they are "apprehensive" about making changes to Medicare's structure, as senior voters are lobbying for drug benefits as soon as possible, but not for other reforms, the Times reports. However, a White House official said that Bush will "insist that any proposal for prescription drug benefits must have major Medicare reforms in it." The official added, "We shouldn't just add liabilities onto a program that's antiquated and likely to go bankrupt" (Pear, New York Times, 1/3).

NBC's "Nightly News" yesterday reported on seniors' waiting for Congress to act on legislation providing prescription drug coverage. The segment includes comments from Rep. Rob Portman (R-Ohio) and Alliance for Retired Americans Executive Director Ed Coyle (Johns, "Nightly News," NBC, 1/2). A transcript of the segment is available online.