MEDICARE REFORM: Panel Leaning Toward Premium Support
Medicare would be radically revamped to resemble the Federal Employees Health Benefits Program -- including prescription drug coverage and premium support in lieu of a fee-for-service system -- under a proposal presented yesterday to the National Bipartisan Commission on the Future of Medicare. Building on the Medicare+Choice reforms begun in 1997, commission co-chairs Sen. John Breaux (D-LA) and Rep. Bill Thomas (R-CA) recommended allowing Medicare enrollees to "choose from a wide range of traditional insurance plans and [HMOs]," with the ability to switch plans once a year. The government would pay for a significant portion of the average premium, with the beneficiary paying for the remainder -- or more if they choose a more expensive plan. The New York Times reports that beneficiaries "would still have the option of traditional [fee-for-service] Medicare coverage." Other aspects of the proposal, which will be drafted in more detail by commission members, could include requiring Medigap and Medicare HMO plans to cover prescription drugs, raising the eligibility age to 67, giving Medicare officials "more authority to choose ... doctors, hospitals and other health care providers," and ending Medicare's responsibility for the funding of graduate medical education (see yesterday's CHL for further coverage of proposals).
Counting the Votes
Breaux and Thomas' proposed changes appear to already have 10 of the 11 votes necessary for a panel recommendation, with all eight panel Republicans and Democrats Breaux and Sen. Bob Kerrey (NE) in favor. However, several commission members were scornful of the assumptions inherent in the proposal. Former HCFA Administrator Bruce Vladeck dismissed as "total fantasy" the assertion that "competition among private health plans would hold down costs." And Medicare trustee Marilyn Moon countered Breaux's argument that beneficiaries would be "smart shoppers," saying, "One-third of the 39 million Medicare beneficiaries are unlikely to participate in a competitive market because they have major medical problems. ... That makes them much more conservative about changing health plans. They are more likely to stick with one plan, even if it becomes more expensive. And they probably won't be sought out by health plans in their marketing campaigns." Sen. Jay Rockefeller (D-WV) expressed fears that "healthy people would desert the original Medicare program," leaving a "smaller and smaller fee-for-service Medicare program, with older, sicker and poorer people." He added that rural areas would also be neglected. The Times reports that "[i]t is difficult to predict whether Congress or President Clinton would accept a bill embodying Mr. Breaux's ideas, but Congress does seem likely to move in the direction."
The Impeachment Effect
Rep. Jim McDermott (D-WA) argued for an extension of the commission's March 1 deadline, upon which it must submit all recommendations to Congress, because the five Senators on the commission will be wrapped up in the impeachment trial of President Clinton. But Breaux "rejected the idea of an extension, saying that any delay would increase the probability of Medicare's becoming entangled in the politics of the next Presidential election" (Pear, 1/7). CongressDaily reported yesterday that "Breaux and Thomas agreed Congress is more likely to act on their recommendations if they are submitted sooner rather than later" (Morrissey, 1/6).
The California Physicians Alliance came out against the premium support plan, saying, "The politicians turn to the marketplace to accomplish this magic of paying for more services with less money. ... The fallacy that the marketplace can provide basic coverage for less money is demonstrated by the behavior of the Medicare HMOs today." The group criticized handing over more business to the managed care industry, and concluded that Medicare must "control costs through changes that will direct our health care dollars to the only special interest that counts, the patient, while avoiding well meaning but ill-conceived concepts such as premium support" (CPA release, 1/6). House Ways and Means Committee Chair Bill Archer (R-TX), in the wake of yesterday's statement by Vladeck that saving Medicare requires raising taxes, wrote a letter to President Clinton urging him to resist future tax hikes. He wrote, "[I]f you pay for your spending increases with tax hikes that suffer from overwhelming bipartisan opposition, your plan would lead to an increase in government spending and therefore stand little change of passage. It would be preferable if you paid for your programs by cutting wasteful Washington spending" (release, 1/6).