Despite abundant evidence of its success, Democrats are still on the warpath against President Bush’s 2004 Medicare prescription-drug plan – and they threaten to undermine future success if they take control of Congress.
At an Oct. 4 campaign event in Sunrise, Fla., House Minority Leader Nancy Pelosi, D-Calif., declared, “This is a bill borne of corruption at the expense of America’s seniors, and we can do something about it.”
She promised that one of the top priorities of a Democratic Congress would be to authorize the federal government to directly negotiate with drug companies to lower their prices instead of relying on private insurance companies.
The savings, she said, would be used to close the “doughnut hole,” the gap between the first $2,250 in a beneficiary’s annual drug expenditures, of which the government pays 75 percent of the cost, and $5,100, above which it pays 100 percent.
To save money, Congress required seniors to cover the $2,850 hole themselves, either by buying insurance or paying out of their own pockets – which Democrats denounced at the time even as they assailed the administration for underestimating the total cost of program.
According to Mark McClellan, who is leaving this week as head of the Centers for Medicare and Medicaid Services, competition among private insurance companies and their negotiations with drug companies have lowered the estimated 10-year cost of the program by nearly 20 percent, to $516 billion, and may reduce it by another 10 percent next year.
That was just one of the successes he cited at a reporters’ breakfast sponsored by the Christian Science Monitor, as well as in a subsequent interview. Others include the fact that the average prescription drug-insurance premium paid by seniors is $27 per month, not $34, as originally estimated.
And polls show consistently that 75 percent to 85 percent of participants in the program are happy with it. J.D. Power and Associates recently gave the program, known as Medicare Part D, a 75 percent approval rating. A forthcoming AARP study shows that only 11 percent of seniors disapprove.
Democrats predicted that few private insurance plans would participate in the program. Then, when dozens of companies offered competing plans, they charged that the program was “chaotic” and that seniors were so confused that few would sign up.
In fact, 16 million seniors who previously lacked drug coverage did sign up. According to the CMS, 90 percent of all the nation’s 43 million Medicare beneficiaries now have coverage. Their average savings for drug purchases is $1,200 a year. About 9 million low-income seniors pay nothing for their drugs.
McClellan pointed out that the original Democratic plan for eliminating the doughnut hole would have cost $1 trillion. As the program has developed, according to America’s Health Insurance Plans, the health insurance lobby, 15 percent to 25 percent of seniors have been able to find plans that cover all their drug outlays, thus closing the hole.
If Democrats do take over either the House or Senate, or both, they should strive to improve on the Medicare reform record set by McClellan and the Bush administration – not undermine it with top-heavy government regulation.
Rep. Henry Waxman, D-Calif., one of the leading critics of Bush’s policy who’s slated to be chairman of the Government Reform Committee if Democrats take over, said in a January radio address, “We need to go back to basics. Put prescription-drug coverage in regular Medicare. Make the choice simple. Make the benefit understandable. Use the purchasing power of all of America’s seniors to get low prices and better coverage.”
A popular Democratic idea is to have Medicare set prices for drugs the way the Veterans Affairs does for its participants. It’s true that VA drugs cost about half the Medicare average, but the VA supplies only about half of the drugs most commonly used by seniors, according to McClellan.
About 35 percent of VA patients also participate in Medicare plans to obtain wider choices, and the VA patients are required to see only VA doctors and use VA hospitals and VA pharmacies.
According to McClellan, “our beneficiaries have actively told us by their choices that they do not want a restricted network approach to delivery of their health care. They want much more access to physicians, to neighborhood pharmacies, to other providers and drugs.”
Congress certainly could improve Medicare. It could ensure that about 3 million low-income seniors who currently lack drug coverage get it and apply Part D savings to close the doughnut hole.
In Congress’ lame-duck session, and in years to come, it also could build on McClellan’s record of trying to move the nation toward a results-based payment system for health care, not the current service-based system.
The lame-duck session will consider bills to prevent cuts in reimbursements for physicians who treat Medicare beneficiaries. It should tie pay increases to requirements that doctors keep records on their patients’ health progress.
McClellan has introduced a system whereby hospitals report on treatment outcomes, with the results posted online for patients to see. There’s a pilot program for physicians, but he said pay-for-results should be the rule across-the-board.
He also has introduced an incomes-based premium schedule for part of the Medicare system to begin coping with its “unsustainable” long-term cost. It’s an alternative to straight means-testing of Medicare, which is anathema to Democrats.
John Rother, national policy director of the AARP, told me that McClellan rates as “one of the all-time best administrators the program has ever had. He’s guided it through a very ambitious set of reforms. ... He’s a very creative guy and has maintained bipartisan support for most of his agenda. He gets very high marks.”
Congress should see to it that the reform agenda advances and that doctors, health plans, drug companies and hospitals have incentives to compete on the basis of their ability to keep people healthy – not just treat sick people at government-set prices. If they do take control, Democrats need to reform not only health care but their own thinking.
(Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.)
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