Drug Dealbreaker

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Drug Dealbreaker

From TomPaine.com

October 2003

Bob Hayes is the president, and Ben Peck the Washington policy director, of the Medicare Rights Center, a national consumer organization.

For more than a decade, a unified electorate has demanded that Congress update Medicare—the Great Society health insurance program for older and disabled Americans—to cover the cost of prescription drugs.

Medicare is a great social success: it has extended and improved dramatically the quality of life for older Americans. But well into its fourth decade the program is getting rusty. For starters, Medicare does not cover most home or long-term care and it has imposed harsh limits on the mental health care that is covered.

For years, however, politicians have focused nearly all their attention on one great coverage gap: the cost of the medicines that doctors prescribe to their patients. Nearly everyone agrees that it makes no sense to pay a physician to prescribe a drug that is unaffordable or to pay for surgeries and hospitalizations that would be avoidable if patients had access to necessary medications.

So the battle in past years, and this year, is prescription drugs. The fight is not over whether to add a drug benefit; the fight is over how. And yet, with Congress lurching toward failure, the question is why—year after year—Congress defies the will of an overwhelming majority of the American people.

In order to understand why Medicare legislation is languishing in Congress, one has to understand the ideologue. Ideologues, be they in the hills of Afghanistan or in Washington , hold beliefs based on faith, not evidence.

Pitfalls Of Privatization

Free markets work in many segments of the U.S. economy. But, despite overwhelming historical evidence that markets do not work to provide affordable health care to older Americans, ideologues—mostly in the Bush administration and the House of Representatives—insist that the price of a Medicare drug benefit is the privatization of Medicare, America’s successful single-payer national health care system.

Despite the national consensus around the importance of reforming Medicare to cover the cost of prescription drugs, final agreement on legislation is stalled. This deadlock is due largely to a core group in the House that no longer wants Medicare to run as a government program that guarantees a set of health benefits at a known price. Instead, they want to establish a government-financed voucher system in which private, for-profit HMOs and other private insurers offer a multitude of varying policies for sale at varying prices.

The ideologues want to gut, slowly but surely, what may be the nation’s most successful domestic program created in the last half century: Medicare has radically cut the poverty rate among older Americans, helped extend both the duration and quality of life of older Americans and has done so by controlling costs far more effectively than any private insurance system. So why are the ideologues so intent on ending Medicare as we know it?

Perhaps because seniors and people with disabilities served by the Medicare program want private for-profit plans to play a greater role? No. People with Medicare overwhelmingly approve of the way the traditional Medicare program is structured. They value Medicare’s reliable coverage, wide choice of doctors and hospitals and guaranteed benefits. Most people with Medicare do not like the plans offered by private insurers, mainly HMOs, that are available to them. About 6 in 10 people with Medicare have the choice to enroll in an HMO, but only about 1 in 10 actually do.

While ideologues crow about older Americans having a “choice” of health insurance programs, people with Medicare understandably cherish their “choice” of doctors—a choice virtually guaranteed by traditional Medicare but denied by Medicare private insurance plans.

No one denies that budgets are tight and an aging population will add to Medicare’s costs. Would private, for-profit plans cut the cost of good health care? Unfortunately not.

It’s not cost-effective for private health plans to run Medicare. Nonpartisan data show that the government pays more to offer the same benefits to people with Medicare through private plans. For example, in 1998, the government paid HMOs $5.2 billion more to cover health care costs for people with Medicare than it would have cost through traditional Medicare.

The reasons are obvious:

For-profit plans have much higher administrative costs than the government-run Medicare program; advertising, high executive compensation and profits to shareholders drain money from a health-care system.

Private insurers cannot negotiate the best prices with health-care providers like Medicare can because each private insurer has a much smaller market share. According to the Medicare Payment Advisory Commission, which advises Congress, private health plans pay about 15 percent more than Medicare to purchase similar services from doctors and hospitals. So why are the ideologues demanding an overhaul of Medicare that is neither popular nor cost effective? Maybe it is faith trumping objective evidence. A true believer in markets will believe no matter what the facts are.

Or maybe it is something more sinister.

Pitting Government Against The Marketplace

A cultural war rages in Washington over the role of government as an activist force to improve the quality of life for the American people. A core group continues to believe that both the New Deal of Franklin D. Roosevelt and the Great Society of Lyndon B. Johnson are drags on our national, market-based destiny.

Medicare, with all its imperfections, represents a governmental success, a kept promise that society will devote the resources to assure that the elderly and the disabled have good health care. It is successful, it is popular and it drives market ideologues wild.

Having private plans run Medicare would not be more efficient, but it could provide political cover to gut Medicare’s guarantee of reliable health care. Once private plans are in place it will be much easier for politicians to cut Medicare spending by giving seniors and people with disabilities a voucher to buy health insurance in the marketplace.

Then insurance companies, not politicians, take the blame for cuts in benefits. That, as much as anything, is what the ideologues want.

On a daily basis we work with older Americans who cannot afford the medicines their doctors prescribe. Beverly Lowy, 70 years-old and a former writer and editor, recently stopped taking medication for osteoporosis due to the cost, $125 a month, although her vertebrae had collapsed in 2001.

Mrs. Lowy suffers from end stage obstructive pulmonary disease, along with osteoporosis. Her husband suffers from end stage renal disease and heart disease. A once comfortable couple, they now face nearly $12,000 in annual drug bills, and their savings are evaporating.

Mrs. Lowy, and tens of millions of people on Medicare, know how important a Medicare drug benefit is to their health and security.

But let no one be fooled. Gutting Medicare as a price for a prescription drug benefit is a bad deal that will erode the nation’s health security. It is an unacceptable human cost.