President Bush Unveils Medicare Reform Framework in Speech to American Medical Association

As expected, in a speech before the American Medical Association yesterday, President Bush unveiled his Medicare reform framework, which he said would give beneficiaries "a broad choice among competing health care plans," like those available to federal employees, the New York Times reports (Pear/Toner, New York Times, 3/5). However, several top Republican legislators and many Democratic lawmakers said the proposal is "inadequate" because it would not give beneficiaries who stay in traditional Medicare "meaningful drug coverage," the Philadelphia Inquirer reports (Hutcheson/Enda, Philadelphia Inquirer, 3/5). Under the Medicare framework that Bush outlined yesterday, beneficiaries would have three different options for coverage:

The first option would offer discount cards to beneficiaries who remain in traditional Medicare to save 10% to 25% on prescriptions and would give low-income beneficiaries $600 per year to offset their drug costs. In 2006, beneficiaries in traditional Medicare would receive catastrophic drug coverage. The catastrophic coverage benefit reportedly would take effect for beneficiaries who spent $5,500 to $7,000 on medications in a year; Congress would determine the eventual cap.
Under a second option, seniors could join a new private system called "Enhanced Medicare," which would begin in 2006 and give beneficiaries a more generous drug benefit, full coverage for preventive care and lower out-of-pocket costs for hospital stays. The "Enhanced Medicare" option would allow private health plans to offer different drug benefits, with different premiums, copayments and deductibles, so long as the plans meet "a basic federal standard," which is not yet set. To assuage concerns that private health plans might not be available in rural areas, the "Enhanced Medicare" option would divide the country into 10 regions, and the government would then contract with several private plans in each region.
The third option, called "Medicare Advantage," would be similar to Medicare+Choice, which offers beneficiaries a choice of private plans with and without drug coverage but no guaranteed drug benefit.

Bush aides said that implementing the proposals under the administration's new Medicare framework would cost $400 billion over 10 years; the president's fiscal year 2004 budget proposal calls for a $6 billion "downpayment" on the plan (California Healthline, 3/4). Many of the framework's details -- such as premiums, copays or deductibles and coverage levels -- must still be worked out with Congress, the New York Times reports (New York Times, 3/5).

Mixed Congressional Reaction

Bush told the AMA, "People have strong opinions on this matter, and we will need broad cooperation to move forward." But Senate Minority Leader Tom Daschle (D-S.D.) said Bush's Medicare reform outline "has very little chance of survival under the current circumstances" because there is a "significant level of opposition, even among the president's own ranks" (Lueck/Cummings, Wall Street Journal, 3/5). Senate Finance Committee Chair Charles Grassley (R-Iowa) said, "We need a universal drug benefit so seniors who want to stay in traditional Medicare get a prescription drug plan that's just as good as those who choose a new option," the New York Times reports (New York Times, 3/5.) House Energy and Commerce Committee Chair Billy Tauzin (R-La.) added that his committee "almost certainly will want a strong and adequate prescription drug benefit within traditional fee-for-service Medicare," the Wall Street Journal reports (Wall Street Journal, 3/5). "The president has taken a step in the right direction, but he has not gone far enough," Sen. Olympia Snowe (R-Maine) said, adding, "Every senior should have access to comprehensive prescription-drug coverage, regardless of which option they choose" (Kemper, Los Angeles Times, 3/5). Sen. Edward Kennedy (D-Mass.) said the proposal "is a radical prescription for dismantling Medicare that ... should be rejected by Congress [and it] denies senior citizens comprehensive Medicare prescription drug benefits they need unless they join an HMO or other private insurance plan," the Washington Times reports (Curl, Washington Times, 3/5). However, Sen. John Breaux (D-La.) said the Bush plan "has the best of what government can do, the best of what the private sector can do," adding that he was "more optimistic" about this proposal's future than he was about previous reform plans (Philadelphia Inquirer, 3/5). Senate Majority Leader Bill Frist (R-Tenn.) added that the plan "gives seniors the option to choose the sort of health plan that best meets their needs. It offers an element of universality to prescription drugs" (Hirschfeld Davis, Baltimore Sun, 3/5).

Other Reactions

"The Bush plan is the same old tune and still off-key," Ron Pollack, Families USA executive director, said. John Sweeney, president of the AFL-CIO, added, "Seniors don't need recycled gimmicks like discount cards that even the General Accounting Office says will only save $3.50 per prescription or confusing differences between levels of benefits that appear to bribe seniors into joining risky HMOs." However, AMA President Yank Coble said, "We're pleased President Bush's plan recognizes the importance of patient choice and believe such an approach is needed to ensure that the trusted relationships seniors have with their doctors are protected" (Rovner et. al., CongressDaily/AM, 3/5). Tyler Mason, a spokesperson for health insurer PacifiCare, said, "We think the basic principle -- a public-private partnership -- is in the best interest of beneficiaries" (Feder Ostrov/Krieger, San Jose Mercury News, 3/5). John Rother, policy director at AARP, said the Bush proposal is "constructive," but added that beneficiaries who stay in traditional Medicare should be offered a more comprehensive drug benefit, the Detroit News reports. Rother said the $400 billion Bush has proposed for Medicare would be "inadequate" to create affordable health plans (Price, Detroit News, 3/5). See related story in Opinion section on more reaction to the Medicare framework.

House Democrats Reintroduce Their Own Medicare Proposal

As expected, House Democrats yesterday introduced their own Medicare reform proposal, which "contrasts sharply" with Bush's proposal, the Chicago Tribune reports (Neikirk, Chicago Tribune, 3/5). The plan, similar to one introduced last year, would call for a voluntary drug benefit that would have a $25 monthly premium, a $100 annual deductible and cover 80% of drug costs up to a $2,000 out-of-pocket limit, after which Medicare would pay remaining drug costs. The HHS secretary would be given "explicit authority" to negotiate lower drug prices and use "other techniques" to keep the drug benefit's total cost down. The House Democrats' plan would cost between $700 billion and $900 billion over 10 years (American Health Line, 3/4). "The Democratic plan is about keeping seniors in a trusted, effective program," Rep. John Dingell (D-Mich.) said (Detroit News, 3/5).

Other Medicare Coverage

"Bush Plan a Boon to Drug Companies," Washington Post: The Post reports that health care economists called Bush's Medicare reform framework a "bonanza for the pharmaceutical and managed care industries, both of which are huge donors to Republicans." The analysts said, for example, that pharmaceutical companies "could be expected to reap huge profits" under the framework because more seniors could afford prescription drugs, and physicians would likely write more prescriptions. In addition, Urban Institute Senior Fellow Marilyn Moon said that the framework "would hand tremendous negotiating power to health insurance companies," according to the Post. However, CMS Administrator Thomas Scully said that competitive bids from health plans would create "the same benefit for lower cost to the government and the beneficiary." He added, "The only success anyone has seen in controlling drug costs has been when private health plans have used the power of the market to negotiate cheaper rates" (Allen, Washington Post, 3/5).
"How Bush Plan on Medicare Will Affect You," Wall Street Journal: The Journal today features an article in question-and-answer format that addresses a number of concerns about Bush's Medicare reform framework: "How would seniors be affected?"; "What happens to those who stay in traditional Medicare? Do they get a drug benefit?"; "What about the 'Enhanced Medicare' option? Does that give seniors a bigger drug benefit -- like the kind that most people under 65 get from their employers?"; "What's the third option -- 'Medicare Advantage'?"; "Medicare+Choice was a bust, with plans dropping out because they didn't get paid enough by the government. Why should 'Medicare Advantage' work any better?"; "What happens now?"; "What's the timetable for congressional action?"; and "When does the president want all this to take effect?" (McGinley, Wall Street Journal, 3/5).

Broadcast Coverage

The following broadcast programs reported on Bush's Medicare reform outline:

CBS' "Evening News": The segment includes comments from Senate Minority Leader Tom Daschle (D-S.D.), Sen. Olympia Snowe (R-Maine), House Ways and Means Committee Chairman Bill Thomas (R-Calif.) and Rep. Billy Tauzin (R-La.) (Chen, "Evening News," CBS, 3/4). A transcript of the segment is available online.
CNN's "Inside Politics": "Crossfire" hosts Paul Begala and Bob Novak discussed the Bush proposal (Woodruff, "Inside Politics," CNN, 3/4). A transcript of the program is available online.
NBC's "Nightly News": The segment includes comments from Kennedy and Tauzin (Brown, "Nightly News," NBC, 3/4). A transcript of the segment is available online.
NPR's "All Things Considered": The segment outlines the details of Bush's plan (Naylor, "All Things Considered," NPR, 3/4). The full segment is available in RealPlayer online. In addition, extended NPR coverage is available online.
NPR's "All Things Considered": NPR's Julie Rovner reports on the "ho-hum" reaction to Bush's proposal (Rovner, "All Things Considered," NPR, 3/4 ). The full segment is available in RealPlayer online.
NPR's "Morning Edition": The segment reports on the "reserved" reaction among Republicans and Democrats (Seabrook, "Morning Edition," NPR, 3/5). The full segment is available in RealPlayer online.
NPR's "Talk of the Nation": The program today will include a discussion of managed health care, including the managed care option in Bush's proposal and the history and success of HMOs (Conan, "Talk of the Nation, NPR, 3/5). The full segment will be available in RealPlayer after 6 p.m. ET online.
PBS' "NewsHour with Jim Lehrer": Health correspondent Susan Dentzer discusses the debate over Medicare's future (Dentzer, "NewsHour with Jim Lehrer," PBS, 3/4). The full segment is available in RealPlayer online.
MPR's "Marketplace": The segment includes comments from Pollack and Brandeis University health policy professor Stuart Altman (Palmer, "Marketplace," MPR, 3/4). The full segment is available in RealPlayer online.

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.