The passage of the Republican Medicare overhaul, with its new prescription-drug benefit provided wholly by private insurers, was a huge political victory for the president and an ideological triumph for conservatives. Unlike Bill Clinton 10 years ago, George W. Bush promised an extension of health coverage and has now delivered it. Conservatives, moreover, have succeeded in laying the foundations for privatizing Medicare.
Or have they?
Even as Bush signed the legislation on Dec. 8, polls showed more Americans opposing it than supporting it, and the reception isn't likely to grow more friendly as the elderly learn more of the details. The bill purports to offer choice to seniors but actually limits their choices in ways that they will likely see as illegitimate.
The most striking restriction is a prohibition against supplementary insurance. Under Medicare today, the elderly can buy "Medigap" coverage to make up for the program's limitations. Under the new prescription benefit, besides paying a premium of indeterminate amount, the elderly will pay a $250 deductible, 25 percent of drug costs up to $2,250 and then all of the next $2,550. The law, however, bars them from buying a Medigap policy to protect themselves against these costs. I look forward to seeing the bill's supporters try to justify this prohibition to seniors -- especially to seniors who currently have more generous coverage under Medicaid or retiree health plans that the legislation will jeopardize.
Medicare's new private prescription plans will also cover only certain drugs in every category. For example, they might cover some antidepressants but not others. What if the drug you need falls outside the list? Too bad for you. Your expenses for those drugs won't even count toward meeting your cost-sharing requirement.
This parody of "choice" fulfills the warnings that conservatives used to make before 1965 about Medicare restricting freedom and interfering in the practice of medicine. In fact, Medicare until now has enhanced choice for seniors; it's the Republican changes that threaten their liberty.
If their annual expenditures for drugs pass $5,100, the elderly will enjoy 95 percent coverage of their costs -- and this, too, is a problem. The program is chiefly attractive to seniors who need very expensive drugs -- and to pharmaceutical companies that are afraid of public protests against exorbitant drug prices. Because the legislation precludes any price controls or even using Medicare's purchasing power to bargain with drug companies, the program is likely to aggravate prescription-drug inflation.
And partly because of the likely inflationary effect, it's unclear whether private insurers will create the plans that the legislation envisions (no such plans exist today), or what coverage they will offer, or what the monthly premiums will be, or whether these plans will be sustainable in the long run.
Some conservatives opposed this legislation because they believe it creates a new entitlement that will only be expanded, and that the costs will turn out to be far higher than estimated. Much history supports those expectations, and there would be every reason to expect them to be fulfilled again -- except for one thing.
Even before the prescription-drug bill, Medicare was already facing dire fiscal problems in coming decades with the retirement of the baby boomers. The Bush income-tax cuts exhausted Clinton's budget surpluses (built up partly as a result of earlier Social Security and Medicare tax increases) and set the budget on a path that will likely put the entire Medicare program at risk in the future.
Now add the prescription-drug benefit. Throw in higher payments to HMOs for beneficiaries that traditional Medicare could cover more cheaply. Touted as a means of making Medicare more efficient, the new legislation is likely to hasten the day of financial reckoning. The true importance of this bill may be that it will set the terms for the future political explosion that is now virtually certain to happen.
That explosion will take place well beyond the 2004 election. Indeed, the prescription-drug benefit program doesn't go into full effect until 2006. Even so, Democrats should have no difficulty making the case that the drug benefit needs drastic revision. At a meta level, they should be using the fine print in this legislation as an example of why the Republicans can't be trusted on health care. And, as a practical matter, they should be making the straightforward argument: Elect us to fix this. The battle over Medicare is just beginning.
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