MEDICARE REFORM: CaPA, PNHP Come Out Against Premium Support

      Arguing against the proposed premium-support model to shore up Medicare, a new report calls into question the assumption that competition among health plans for Medicare beneficiaries will hold down costs. Predicting instead a rise in costs, California Physicians' Alliance founder Dr. Thomas Bodenheimer reported in the study that Medicare expenditures rose only 1.5% between 1997 and 1998, while those for private insurers climbed 6.1%. Further undermining the assumption that shifting beneficiaries into HMOs would be cost-effective, Bodenheimer reported that HMOs spend significantly more money on administrative costs -- 14% of profits, compared to 2% spent by Medicare. Further, the proposed coverage shift would confuse Medicare beneficiaries, "many of whom have vision difficulties, or do not speak English," Bodenheimer argued. He advocates instead a three-stage alternative to reform: The first stage would create a budget for Medicare, under which the program would "cost between $49 billion and $65 billion less than the current Medicare system in 2010." The second stage would add prescription drug and long term care benefits. The third stage "would create a universal Medicare program by expanding the improved and budgeted Medicare to the entire population" (study text, 2/99).

More Criticism
      Calling the proposed premium-support plan "the wrong prescription for Medicare," Bodenheimer contends the proposal will "funnel billions of taxpayer dollars into the coffers of HMOs" and spark "massive confusion, fraud and abuse" just as "400,000 seniors were dumped [by] private insurers" in the recent Medicare HMO withdrawals. The study says that if seniors were shuttled into HMOs, their health would likely decline, they would face limited physician and hospital choice and become subject to the "quality problems [of] HMOs for the chronically ill and poor." Dr. Quentin Young, former president of the American Public Health Association said, "This study will be, I hope, the nail in the coffin of pushing seniors into HMOs in the guise of 'saving Medicare.' The best solution to the Medicare crisis is a not- for-profit, single payer national health program for all Americans" (CPA release, 2/25). Copies of "Rebuilding Medicare for the 21 Century: A Challenge for the Medicare Commission and the Congress" are available from the CaPA at 510/832-7134 or Health Access/The National Campaign to Protect, Improve and Expand Medicare at 415/395-7959. The two organizations are expected to hold conferences today in Los Angles and San Francisco to outline their concerns.