Health Insurance Industry, Congressional Democrats Respond to Bush’s Anticipated Medicare Reform Plan
Without offering specific endorsements, health insurance industry officials are "welcoming" President Bush's unreleased plan to reform Medicare, the New York Times reports (Freudenheim, New York Times, 1/4). The administration is considering a variety of Medicare reform proposals to emphasize preventive medicine, give beneficiaries more choices and offer a prescription drug benefit. While the administration still is finalizing details, officials said their goal is to "make each Medicare dollar go further" (Chen, Los Angeles Times, 1/4). Under one possible proposal, the administration would encourage beneficiaries to enroll in "more efficient, less costly, [private] health plans." 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. Under another plan, Medicare would offer beneficiaries more services, including a cap on out-of-pocket costs, in exchange for higher premiums. Further, 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 (California Healthline, 1/3). According to officials, Bush also plans to increase Medicare payments to health plans (Los Angeles Times, 1/4).
Insurance and industry officials said any support they will give the administration's plan "hinge[s] on adequate financing." Many health plans have said that Medicare payments are not high enough to cover costs, the New York Times reports. Blue Shield of California CEO Bruce Bodaken, who last year advocated universal health care, said, "The devil is in the details. It is important that we have a fully funded program and not find ourselves with added benefits with no way to pay for them." Karen Ignagni, American Association of Health Plans president, called Medicare reform "inevitable," saying, "From all accounts the Medicare program cannot be sustained as it is." She added that private health plans could "stretch" Medicare funds by providing incentives to beneficiaries to use lower-priced drugs (New York Times, 1/4).
Although Bush's plan has not yet been released, it has met "early resistance" from congressional Democrats, who maintain that Medicare should not have to undergo a "major overhaul" just to add a prescription drug benefit, according to the AP/Baltimore Sun. In a letter to Bush, Sens. Edward Kennedy (D-Mass.), John Rockefeller (D-W.Va.) and Bob Graham (D-Fla.) asked the president to reconsider "tinker[ing] with Medicare's foundation," the AP/Sun reports. They said, "The most important single step we can take to modernize Medicare and make it better is to provide the prescription drug coverage senior citizens need," adding, "We urge you not to divert the Congress from that critical task by insisting that partisan, controversial and potentially destructive changes in Medicare be the price senior citizens have to pay for the affordable prescription drugs they deserve" (AP/Baltimore Sun, 1/4). The Los Angeles Times reports that Democrats have "vowed to put up a fight" if Medicare beneficiaries are required to give up other benefits in return for a drug benefit (Los Angeles Times, 1/4). NBC's "Meet the Press" Sunday included an interview with Sens. Don Nickles (R-Okla.) and Harry Reid (D-Nev.) on several issues, including Medicare reform and a prescription drug benefit for seniors (Russert, "Meet the Press," NBC, 1/5). A full transcript of the program is available online.
The following are summaries of recent newspaper editorials on Bush's Medicare plans:
Boston Herald: When Bush formally announces his Medicare reform plan, he should "call for a major overhaul rather than incremental adjustments that would fail to ensure long-term financial viability," according to a Boston Herald editorial. Bush's first change should be to add a prescription drug benefit, the Herald states, adding that seniors should "pay something" for the drug coverage "if they're able." The editorial also suggests that Bush could base his Medicare reform plans on the Federal Employees Health Benefits Program, which "works quite well" and "fosters competition among insurers" by offering workers a "menu" of health plans. While federal lawmakers usually avoid addressing the "real mess" with "complicated and politically sensitive programs," that "need not be the case with Medicare," the editorial concludes (Boston Herald, 1/6).
Wall Street Journal: A Medicare drug benefit "makes sense ... only if it is added as part of reform that introduces market incentives and competition" to the program, according to a Wall Street Journal editorial. President Bush has recognized that Republicans have the "historic chance" to reform Medicare in a way that would save taxpayers money and provide drug coverage, the editorial states. According to the editorial, the solution is to implement a defined-contribution system like the Federal Employees Health Benefits Program. However, if such broad reforms cannot be enacted, the best "fallback" position would be to provide a privately administered drug benefit to only low-income beneficiaries, keeping the "universal" drug coverage benefit as a "carrot" for future reform, the editorial adds. The editorial concludes that if Medicare reform is not possible even with drug coverage as a "political sweetener, it won't be reformed in our lifetimes" (Wall Street Journal, 1/6).