Old Tricks

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MARCH 17, 2003

Old Tricks

Given the White House's reputation for political savvy and tight
spin control, its very public stumbling over Medicare has been
fascinating to watch. It began back on January 10, when the
administration circulated a memo on Capitol Hill outlining
President Bush's Medicare reform plan, including the requirement
that seniors leave the traditional fee-for-service program and
enroll in HMOs if they wanted to obtain prescription-drug coverage.
This didn't sit well with congressional leaders, in part because
they felt they hadn't been sufficiently consulted beforehand (Ways
and Means Chairman Bill Thomas was said to be particularly piqued)
and in part because the HMO requirement was sure to offend seniors.
So, a few days later, those briefings found their way into the
hands of Robert Pear of The New York Times and Amy Goldstein of The
Washington Post, prompting even Republican allies to trash the plan
publicly: "Prescription-drug coverage should be available to all
seniors, not just those who switch into managed care," said Charles
Grassley, whose Senate Finance Committee has jurisdiction over the
bill. A spokesperson for Senator Olympia Snowe, who also sits on
the Finance Committee, said the senator "clearly would have
concerns about an approach that required entry into managed care in
order to receive prescription drugs."Soon the White House was in full retreat. For weeks, administration
officials had been promising an aggressive push on Medicare reform,
beginning with a major policy speech in Grand Rapids, Michigan, on
the morning following the State of the Union address. But, with so
many would-be allies in a tizzy, the White House scrapped the plan
at the last minute. In Grand Rapids, standing before a backdrop
emblazoned with the words "strengthening medicare," Bush rushed
through a few throwaway lines about protecting seniors and then
moved quickly onto Iraq.

Early February produced two new spectacles: Secretary of Health and
Human Services Tommy Thompson stammered through an appearance
before the House Ways and Means Committee, deflecting questions
from angry representatives with repeated variations of "the
proposal is still being worked on." Then came a story in the
Chicago Tribune, quoting House Speaker Dennis Hastert about a testy
meeting he'd had with Bush at the White House. "I don't think you
can pass a piece of legislation that takes an 80-year-old
grandmother and says you have to give up your fee-for-service as
you know it in order to get a drug piece in it," Hastert recalled
telling the president. Eventually, administration officials began
admitting to reporters that the aborted attempt at reform had been
a fiasco but promising they would unveil a new and improved plan
soon.

This week, they did just that. Or, at least, they tried. In a speech
before the American Medical Association on Tuesday, Bush vowed to
accommodate his critics. "All seniors should have help in buying
prescription drugs," Bush said. "Seniors who are happy with the
current Medicare system should be able to stay in the system and
receive help for prescription drugs." It was precisely what the
naysayers had wanted to hear until Bush explained the details, and
it became apparent that the new plan looked an awful lot like the
old one.

The "help" for prescription drugs that Bush is offering seniors who
stay in traditional Medicare consists, first, of a drug discount
card--which Bush promised would reduce costs by 10 to 25 percent
but has been shown by a General Accounting Office study to offer
average discounts of less than 10 percent. Bush is also offering to
limit seniors' out-of-pocket expenses for prescriptions with a
so-called catastrophic insurance plan that would pay all drug costs
beyond a certain amount per year. While it's a perfectly good idea
in theory, Bush pointedly avoided specifying at what level the
coverage would kick in--apparently because the figure his aides had
talked about days before (between $4,500 and $7,000 in annual
expenses) would be financially crippling to many seniors. Finally,
Bush promised low-income seniors a $600 subsidy in the form of a
debit card--another nice thought but, again, not much help for a
fixed-income senior who would still be responsible for all drug
costs over $600 until the catastrophic insurance kicked in.

Clearly, this is nothing like a real drug benefit--the kind most
Americans with private insurance have and the kind that seniors
would get under Bush's plan if they were to leave traditional
Medicare and enroll in an HMO. In other words, the new Bush reform
scheme would have largely the same effect as the old: forcing
seniors to choose between staying in traditional Medicare and
forgoing significant help on drugs, or getting the help by enrolling
in a managed care plan. Not surprisingly, the next day brought
forth more unenthusiastic responses from Republicans, such as
Louisiana Representative Billy Tauzin: "The bottom line is that,
for those who don't want to even think about a choice here, who
want to stay in fee-for-service, you have to give them an adequate
drug coverage."

Why is Medicare giving Bush such fits? For one thing, he has
forgotten who his supporters are--or, more precisely, where his
supporters are. Besides being Republicans, Grassley, Hastert,
Snowe, and Tauzin have another thing in common: They all represent
areas with significant rural populations, and that's where managed
care has been most problematic. As part of the 1997 balanced budget
agreement, the federal government created Medicare+Choice, bringing
more managed care options into Medicare--in effect, providing an
early test of whether a proposal like Bush's could really work. The
plans rushed in to enlist new members, then rushed right back out
again within a few years. Overall, more than half of the plans have
dropped out, leaving 2.5 million seniors scrambling for coverage.
The problem has been most acute in rural areas, where sparse
populations and the scarcity of doctors and hospitals make it harder
for HMOs to squeeze out profits.

Today, 80 percent of rural Americans have no Medicare HMO, including
the residents of Grassley's Iowa and Snowe's Maine. In other areas,
such as Tauzin's district in Louisiana and Hastert's in Illinois,
tens of thousands lost HMO coverage when insurers left. Given this
situation, it's no wonder these Republicans are nervous about a
plan that reserves full prescription coverage only for those
beneficiaries enrolled in managed care. As Pennsylvania Republican
John E. Peterson, chairman of the Congressional Rural Caucus, told
The New York Times, relying on private plans "doesn't work; it isn't
an option."

The other major reason Bush is running into such trouble is that he
himself has literally made a career of trashing HMOs. During the
2000 campaign, he attacked Al Gore (falsely) for having a plan that
would push seniors into managed care: "[I]t works like an HMO," he
proclaimed in October 2000. "It acts like an HMO. It quacks like an
HMO." As recently as the State of the Union--i.e. , the day before
he planned to announce his Medicare plan--he was still taking
swipes at managed care, declaring, "Instead of bureaucrats and trial
lawyers and HMOs, we must put doctors and nurses and patients back
in charge of American medicine." The problem, of course, is that
the managed care plans he keeps denigrating are the very ones he'd
have seniors leave Medicare to join.

The irony is that the philosophy of Bush's Medicare plan is actually
defensible. Those who advocate significantly expanding the role of
privately run managed care plans include not just conservatives but
also some well- respected liberals, such as Brookings Institute
economist Henry Aaron and syndicated columnist Matt Miller (who
defended the concept in these very pages several years ago). But
those advocates make the case for their plans honestly, arguing
that managed care will discourage seniors from consuming so much
health care, thereby reducing costs. Bush, by contrast, has tried
to sell his Medicare plan by pretending to be Ted Kennedy,
promising to add more and more benefits to the government program
seniors love and cherish. It's the way Bush has handled most of his
domestic agenda: talking like a liberal while acting like a
conservative. Only this time, it seems, he's not getting away with
it.

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