Bush Medicare Proposal Urges Switch to Private Insurers

By ROBERT PEAR and ROBIN TONER, NY Times

 March 5, 2003

Associated Press

President Bush said that his vision for Medicare would offer comprehensive coverage of prescription drugs and preventive services to people who join private plans.

WASHINGTON, March 4 — President Bush opened a fractious new round in the Medicare debate today by proposing comprehensive drug coverage for elderly Americans, but only if they switch to subsidized private insurance plans.

Democrats immediately accused the administration of trying to coerce the nation's 40 million elderly and disabled Medicare beneficiaries into managed care, in an effort to privatize one of the most politically popular government programs and consign the elderly to "the tender mercies of an H.M.O.," as Representative John D. Dingell, Democrat of Michigan, put it. The Democrats proposed far more generous, and more costly, drug benefits.

Several leading Republicans, courted by the White House for weeks, were surprisingly cool to Mr. Bush's proposal. They said it still did not offer enough drug benefits to people in the traditional government-run Medicare program, which serves more than 85 percent of all beneficiaries..

"We need a universal drug benefit so seniors who want to stay in traditional Medicare get a prescription drug plan that's just as good as those who choose a new option," said Senator Charles E. Grassley, Republican of Iowa, the chairman of the Finance Committee.

Members of both parties had urged the administration to avoid any hint of penalizing elderly beneficiaries who stay in traditional Medicare. But under Mr. Bush's proposal, the drug benefits available to people in traditional Medicare would be modest, compared with those that private plans would be required to offer.

Today's skirmishing reflected the power of an issue that figured prominently in the last three national elections and could be even more important in 2004. Republicans, now in control of Congress and the White House, feel immense pressure to deliver Medicare drug benefits to the elderly, a critical voting bloc, before the next election.

In a speech today to a friendly audience at the American Medical Association, Mr. Bush invoked the memory of President Lyndon B. Johnson, who signed the original Medicare law in 1965. But Mr. Bush insisted that "a modern Medicare system must offer more choices and better benefits to every senior" and that the way to do that is to introduce free-market competition into Medicare.

"When insurance providers compete for a patient's business, they offer new treatments and services quickly," Mr. Bush said.

Mr. Bush's proposal would offer comprehensive drug benefits to people in private plans. Those in the traditional Medicare program would receive much less assistance: a drug discount card, which could be used at pharmacies, and protection against "high out-of-pocket prescription drug expenses."

The president did not define "high." Administration officials have previously suggested that beneficiaries might have to spend $4,000 to $7,000 of their own money on prescription drugs to qualify.

Three influential Republicans, Senator Olympia J. Snowe of Maine and Representatives Billy Tauzin of Louisiana and Jim Nussle of Iowa, said Mr. Bush's proposal did not guarantee adequate drug benefits for people in the traditional fee-for-service Medicare program.

Senator Snowe, a pivotal member of the Finance Committee, said: "The president has taken a step in the right direction, but he has not gone far enough. Every senior should have access to comprehensive prescription drug coverage, regardless of which Medicare option they choose."

Mr. Tauzin, the chairman of the House Committee on Energy and Commerce, said some Medicare beneficiaries would be reluctant to join private plans, even if drug benefits were offered as an enticement.

"You couldn't move my mother out of Medicare with a bulldozer," Mr. Tauzin said. "She trusts it, believes in it. It's served her well."

Mr. Tauzin said his panel "almost certainly will want a strong and adequate prescription drug benefit within fee-for-service Medicare." Drug benefits in private plans and in traditional Medicare "should be very similar, though not necessarily the same," Mr. Tauzin said.

As they begin drafting legislation, lawmakers face some of the most sensitive questions in the politics of health care: Will the nation's elderly get better care from H.M.O.'s and other private plans than from the original government-run Medicare program? How much should the government encourage the elderly to join those plans? Where is the line between financial incentives and economic coercion?

Republicans are keenly aware that one of the most devastating accusations against President Bill Clinton's plan for universal health insurance was that it would force Americans into H.M.O.'s.

President Bush said again today that he would spend $400 billion to "strengthen and improve Medicare" in the coming decade. That would cover 22 percent of spending on outpatient prescription drugs for Medicare beneficiaries in those years, as projected by the Congressional Budget Office.

Mr. Bush's proposal lacked the details that would permit elderly people to decide what it would mean for them individually. He did not specify the premiums, co-payments or deductibles, nor did he say whether there would be significant gaps in drug coverage.

Medicare officials said they had drafted more detailed proposals, but Mr. Bush and his political advisers decided that it would be better to negotiate the details with Congress.

For months, administration officials have been promising a detailed proposal. They pulled back an earlier draft because of strong bipartisan criticism that it lacked drug benefits for people who stayed in the original Medicare program.

Mr. Nussle, the chairman of the House Budget Committee, said of administration officials: "They are not just two weeks or two months late. They are two years late. They have been unrealistic and unfortunately unable to come together within the administration on what their plan ought to be."

Speaker J. Dennis Hastert of Illinois and the Senate majority leader, Bill Frist of Tennessee, welcomed the president's proposal, but described it as one step in what will be a long, difficult legislative process.

The biggest innovation in Mr. Bush's proposal is to offer enhanced Medicare benefits through private plans — not just health maintenance organizations, but loose networks of doctors and hospitals known as preferred provider organizations. Medicare officials would divide the country into 10 regions and would sign contracts with at least three preferred provider entities in each region.

"Seniors will be able to choose their specialists, their hospitals and their primary doctors," Mr. Bush said. But Medicare officials said that patients would generally have to pay more if they used doctors and hospitals not listed on the roster of "preferred providers."

Mr. Bush said he wanted to give Medicare beneficiaries "a broad choice among competing health care plans," like those available to federal employees.