Congress's Dubious Medicare Reform

How a New Prescription-Drug Plan Could Drive Up Prices for the Elderly

WASHINGTON, D.C.—As the Bush administration hopes the killing of Saddam's two sons in Iraq will restore its PR image, the president's supporters in Congress are preparing a tailor-made campaign issue in the guise of Medicare reform. This legislation, passed in different versions in both House and Senate, must now be reconciled in a conference committee. It aims to provide relief to seniors who currently bear the full cost of the prescription drugs they purchase.

But critics suspect it is meant to make matters worse, confusing and distorting the existing Medicare program until the right wing can abolish it altogether. Passed in 1965, Medicare is one of the very few liberal entitlement programs left.

The legislation is "a farce," said Dr. Quentin Young of Physicians for a National Health Program. "The estimates are that costs for seniors over the next 10 years will total 1.8 trillion. The most generous estimate of the 'benefit' is 400 billion. So it doesn't cover even 25 percent of the total cost."

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  • Congress's Dubious Medicare Reform How a New Prescription-Drug Plan Could Drive Up Prices for the Elderly
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    From Bush's point of view, it doesn't really matter what is enacted. He has already cemented his image as the compassionate conservative who brought together opposing sides in the interest of all seniors. It was in this vein that he urged law makers on May 30 to "get to work, iron out the differences in a constructive way, and then say, and all of us can say, we’ve done our jobs on behalf of America’s seniors."

    If this legislation ever passes, seniors will be so confused about what's going on that they may never know just how much the government is screwing them. Neither the Bush administration nor Congress has much interest in regulating the exorbitant price of drugs. In fact, they are waging a straightforward attack on what little we have of a universal health-care system.

    For now, the House and Senate are split. The Senate's plan covers 50 percent of drug costs up to $4500 a year. Inexplicably, when they reach $4,500, the benefits stop, but pick up again when they reach $5,800. At that point Medicare would cover 90 percent of the costs.

    In the House version, 80 percent of drug costs would be covered up to $2,000 a year. Then nothing up to $4,900. For all costs over $4,900, Medicare pays 100 percent.

    If it passes, the legislation won't take effect until 2006, when the federal budget deficit will be going through the roof. According to an analysis by Consumer Reports, the House version will actually cause seniors to pay more in out-of-pocket annual drug costs ($2,954) than they do now ($2,318).

    The Henry J. Kaiser Family Foundation says seniors would have to pay an extra $1718 under the Senate version, and $1,760 under the House's plan. Neither figure counts the $450 annual premium, which could go up or down depending on the political atmosphere of the time.

    The plan may make matters even worse for the elderly. With these reforms in place, employers will be tempted to reduce or stop the drug coverage they currently provide. The Congressional Budget Office says nearly 40 percent of retired employees with company-sponsored coverage would lose it.

    As for the poor elderly, they really get screwed. Six million of them wouldn’t get a red cent. Instead, they'll be thrown to the wolves by way of the state Medicaid programs, which vary from place to place and will be severely strapped by the fiscal crisis now facing the states.

    Meanwhile, another bill seeks to make it easier for the elderly and the rest of the population to purchase drugs at somewhat reduced prices by importing them from Canada. This means that American drug companies make money two ways: Charging seniors top rates through Medicare, and then opening up a bargain basement market by shipping their pills to Canada and selling them from what amounts to an outlet mall back into the U.S. at lower prices.

     
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