A bitter pill for seniors

December 08, 2003|By Benjamin L. Cardin

FOR CENTURIES, the first rule of medicine has been to "do no harm," but Congress has just seriously harmed a program that has provided America's seniors with a lifeline for nearly 40 years. I have long supported providing seniors with a prescription drug benefit within Medicare, but the newly passed Medicare bill will cause more harm than good.

Under the pretext of offering "choice" to seniors and encouraging free-market competition, this bill gives an unfair advantage to private health plans, an advantage that over time will weaken the guarantee of Medicare as we know it.

This bill grants private insurers billions in federal subsidies to encourage them to re-enter the senior market. As in Medicare+Choice, insurers will craft their benefit packages to attract those with fewer health care needs and lower expenses. As younger, healthier beneficiaries gravitate toward cheaper private plans, traditional Medicare will become the insurer of last resort for high-risk, more expensive seniors.

Under a new demonstration program for all Medicare benefits - otherwise known as premium support - the government's contribution will be based on the average cost of providing health care to all beneficiaries, whether in traditional Medicare or private insurance plans.

Because the government's contribution will be capped, seniors in traditional Medicare for the first time will bear the risk of increasing health care costs. In effect, this new legislation shifts the cost of health care from the government to seniors. Medicare today covers only 53 percent of seniors' health care needs. As a group, seniors have the highest out-of-pocket health care burden in our country. This new legislation will make it even worse.

While some may argue that the damage to Medicare is limited because the "competitive" model will affect only six regions starting in 2010, the groundwork has already been set. Starting in 2004, private insurance companies that enter the Medicare market will be paid on average more than 130 percent of the cost to provide the same services under traditional Medicare.

This is unfair. Those in traditional Medicare will be subsidizing seniors in private insurance.

Marylanders understand what relying on private insurance can do to senior health care. In 1997, eight Medicare HMOs covered more than 100,000 Maryland seniors. These private insurance companies enticed seniors to join their plans by offering more coverage than traditional Medicare. After the seniors joined the HMOs, the companies increased premiums and capped benefits. By 2002, these private insurance companies left the Maryland market all together. Since 1997, 2.4 million seniors nationwide have been abandoned by private insurance even though the private plans were paid at 119 percent of the fee-for-service Medicare costs.

At least these seniors could return to traditional Medicare. For prescription medicines, there will be no such protection. The new legislation does not even guarantee our seniors a basic level of prescription drug coverage. If the model that is used for prescription drugs is used in the name of cost containment for other Medicare services, all seniors will be much worse off.

Although advocates for the new legislation claim that it allows private insurance companies to compete with traditional Medicare, the government is not permitted to provide any other coverage, placing the government at a competitive disadvantage.

It is ironic that these same advocates of "free market forces" in basic Medicare have expressly prohibited the federal government from using the power of the marketplace to reduce the cost of medicines. The bill contains language that prohibits the secretary of health and human services from negotiating lower drug prices, a tool that is used effectively in nearly every other industrialized nation.

Another provision in the bill also threatens Medicare's future. The authors have created a new definition of insolvency that caps Medicare's use of general revenues at 45 percent of total Medicare costs and would force the government to cut benefits or raise payroll taxes if this limit is exceeded. If payroll taxes are increased, such a change would disproportionately affect lower-income Americans, shifting the burden of Medicare away from Americans most able to support it to those who are least able to support it.

Congress has passed a Medicare "reform" bill that could undermine the entire Medicare system. In the name of providing seniors with a much-needed prescription drug benefit, we are asking them to swallow a bitter pill that unless changed will have dire consequences for a program they have come to depend upon.

Benjamin L. Cardin, a Democrat, represents Maryland's 3rd Congressional District in the House of Representatives.

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