MEDICARE REFORM: ‘Premium Support’ Plan Revived
Sens. John Breaux (D-LA) and Bill Frist (R-TN) yesterday breathed new life into their "premium support" plan, devised eight months ago by the National Bipartisan Commission on the Future of Medicare. The plan "narrowly failed" to make it to Congress for consideration. The 80-page bill represents the "first bipartisan" effort to overhaul Medicare, Breaux said, as Frist declared, "It will replace the rigid, antiquated system we have today."
Alterations and Specifics
The Medicare Preservation and Improvement Act of 1999 varies from the commission's original premium support plan in "some important ways," CongressDaily/A.M. reports. The senators dropped several controversial elements, including a proposed raise in Medicare's eligibility age from 65 to 67. They also disposed of plans to combine deductibles for Medicare Parts A and B. The new legislation would allow the Health Care Financing Administration and private insurers, which would compete for beneficiaries, to provide standard and high-end plans that would "include both prescription drug coverage with an actuarial value of at least $800 and a 'stop loss' that would limit beneficiaries' out-of-pocket liability for covered services to $2,000 per year." Beneficiaries with incomes less than 135% of the poverty level would receive full subsidies to cover the cost of the least expensive "high option" plan available, while other low-income recipients would get a "sliding scale subsidy" to help them afford premiums, which would be limited in rural and noncompetitive areas.
A Drug Benefit!
Additionally, CongressDaily/A.M. reports, building on the commission's plan to offer low-income beneficiaries drug coverage, the bill extends a prescription benefit to all Medicare recipients (Rovner, 11/10). "We have included drug benefits along with structural Medicare reforms because the system must be updated and financially solvent before this nation can afford to add the prescription drug coverage millions of Medicare recipients need and deserve," Breaux and Frist said. They added, "We are disappointed that Congress did not address Medicare reform this year but we will continue our effort to enact comprehensive [change]. ... We hope to continue to work in a bipartisan fashion with our fellow members of Congress, beneficiary groups, industry and the Administration to build on this proposal introduced today" (Breaux release, 11/9).
'Healthy Prescription' or Death Knell?
Calling the plan a "healthy prescription" to treat Medicare's problems, Alan Homer, president and CEO of the Pharmaceutical Research Manufacturers of America, congratulated the senators on the "first legislative introduction of a premium support model." He noted, "As we said when the Bipartisan Commission on Medicare endorsed this model, we are encouraged by the ... proposal because it would promote ... high-quality, integrated health care for seniors and the disabled as well as cost containment based on market competition, not government price controls" (PhRMA release, 11/9). American Association of Health Plans President Karen Ignagni echoed the sentiment, praising "Sens. Breaux and Frist for moving Medicare onto the short list of political issues for 2000. ... These senators want to stabilize the Medicare program and empower beneficiaries to have a choice of the delivery model that best suits them" (AAHP release, 11/9).
JAMA's Timely Commentary
A review of the commission's original premium support plan in this week's Journal of the American Medical Association pans the idea, contending that the "proposal essentially could put the entire Medicare program at risk." Authors Barbara Markham Smith, senior research staff scientist at the George Washington University Medical Center, and Sara Rosenbaum, director of the Center for Health Services Research and Policy at GWU's School of Public Health and Health Services, write that the plan "appears to eliminate Medicare's guaranteed coverage and remove its true benefit floor," as beneficiaries are not provided with an "automatic default insurance option" in which they will always be enrolled. "Without this provision, the promise of guaranteed insurance disappears. The risk is the emergence of phenomenon the United States has not seen in 35 years: a significant uninsured elderly population," the authors argue. Further, "the premium support proposal rests on the assumption that a vigorous Medicare market will contain costs" but "this assumption directly contradicts Medicare's actual experience in expanding the role of private insurance in the program," they note. "Far from being a vigorous market for cost-containment, the assumed market in the premium support model in fact may be weak and ephemeral. ... Except for a handful of companies that somehow found a market niche, private insurance companies would abandon the market," while "traditional Medicare would continue to attract the worst risks" thus driving up premiums and rendering the program "inaccessible as a 'safety net.'" The writers conclude, "The premium support proposal not only could fail to address Medicare's most pressing challenges but also might create new and serious problems" (11/10).