Bush presented his plan merely as a “framework” for discussion, but he has a clear idea in mind. The Medicare of the future may be offered in three tiers:
Basic, original Medicare–now serving 88 percent of seniors–would include a discount card that might cut 10 to 25 percent off the price of the drugs you buy (many seniors get similar discounts already, through other programs). Low-income seniors could get an extra $600 to help pay for prescriptions. You’d have some sort of catastrophic coverage–meaning further assistance if your drug bills grew too high (maybe to $4,000 to $7,000 in a year). Those are pretty limited benefits, but more than Medicare offers now.
Then there’s the program known as Medicare ? Choice, now composed mostly of privately run Medicare HMOs. Bush would give them federal dollars so they could offer prescription drugs. Many HMOs had drug programs once but dropped them when the cost went up.
Seniors willing to pay more could join a privately run “Enhanced Medicare” plan–a preferred-provider organization (PPO). You’d get drug coverage, preventive care and other perks. The government would subsidize these PPOs, to hold down your out-of-pocket costs. “They’re essentially bribing people to switch into the private programs,” says senior fellow Marilyn Moon of the Urban Institute in Washington, D.C. Health insurers would compete to offer you attractive plans.
Congress will weigh in with changes of its own, but this brief outline shows you where we’re probably going. In the long run, many privatizers hope, original Medicare will be taken out and shot.
Yet no one can explain to me what, exactly, is wrong with traditional Medicare. Why is Bush eager to subsidize private plans for seniors while spurning the one plan that people have trusted for nearly 40 years? In either case, seniors will have to pay more for their medical care. Why not support the plan they like best? To reject all government programs is knee-jerk dumb.
Medicare’s detractors all use the same words to disparage it: antiquated, obsolete, a broken system. OK, these charges carry an itty bit of truth, but not because anything is wrong with Medicare’s overall design. Congress chose to let the program fall behind private medical care, says Princeton health-care economist Uwe Reinhardt–for example, by not covering certain drugs that private plans allow. If this Congress weren’t so ideologically opposed to government ideas–even good ones–it could easily bring Medicare up to date again.
The charges leveled by the anti-Medicare cabal should simply make you laugh. But Big Lies, repeated, often work. Here are some of the calumnies you’ll hear:
Myth: Medicare is hopelessly bureaucratic. Well, excuse me. What would you call your private managed care? Doctors and hospitals are wasting a fortune on extra clerical help, not to handle Medicare but to struggle with the patchwork bureaucracies of private plans. If the managed-care system for people under 65 were government-run, the public would be foaming at the mouth. But because it’s “private” (that mystical word), we bow our heads.
Myth: Medicare costs more than private plans. Well, no. A report in 2000 by the federal General Accounting Office found that Medicare ? Choice cost the government more than if its members had been treated through traditional Medicare. And unlike HMOs, Medicare never goes out of business, leaving seniors scrambling. Recently Congress cut the reimbursements to Medicare HMOs, causing the plans to cut benefits and hike premiums. Out-of-pocket costs are now burdensome for the chronically ill and those with low incomes, concludes a 2002 report supported by the Commonwealth Fund. The Center for Studying Health System Change finds that private plans generally pay doctors and hospitals more than Medicare does.
Myth: Private plans are always more efficient. No, again. Medicare’s overhead runs at 2 percent while Medicare HMOs spend around 15 percent. Supposedly, private plans are so super efficient that they can cover their higher costs and save money, too. But it hasn’t worked out that way. Given the same dollars spent, private plans use up more for salaries, paperwork and profits. Traditional Medicare doles out more on patient care.
Today’s seniors don’t want Medicare to change, says Thomas Scully, head of the federal Centers for Medicare and Medicaid Services. But he thinks that boomers will readily move from their Oxford or Blue Cross PPOs to their insurer’s Medicare plan. Privatizing will almost certainly raise their costs. But maybe that will become a status symbol for the next wheelchair set.
