by John M. Curtis
(310) 204-8700

Copyright November 17, 2003
All Rights Reserved.

urning the midnight oil, bipartisan House and Senate leaders neared completion of a 10-year, $400 billion prescription drug plan, designed to overhaul the Medicare program, first enacted in 1965 during the administration of Lyndon B. Johnson, two short years after the assassination of President John F. Kennedy. House and Senate conferees announced “an agreement on principles” for a new prescription drug benefit, something sorely missing from the original legislation. Yet tied together with the bait of a prescription drug benefit is the hook of privatizing the $257 billion national health plan for seniors, turning Medicare's traditional fee-for-service system into the world's biggest HMO. Adding prescription drug benefits won't improve the health of seniors if the overall quality of medical services deteriorates. No senior stands to gain if prescription drugs come at the expense of quality health care.

      Over the past 10 years, Medicare HMOs performed an end-run around quality care, frequently denying access to needed medical services. Offering more benefits on glossy paper rarely translates into improved health services. Seniors in Medicare HMOs find themselves unable to access costly specialists or medical tests readily available to fee-for-service patients. Senior HMO plans promise lavish benefits, often seducing seniors into trading fee-for-service Medicare for low deductibles and prescription drugs. But once transferred into HMOs, seniors get shortchanged, frequently complaining that they don't get needed medical care. Before the new prescription drug benefit gets activated, seniors would pay an annual fee of $30 for a drug discount card, saving 15% to 25% of prescription costs. Yet there's no cap on prices charged by drug companies, negating any expected benefits.

      Giving private insurance companies and hospitals the upper hand, Medicare reform promises to hand unchallenged authority to HMOs and large multi-specialty medical groups from whom seniors would draw their benefits. “Seniors have waited a long time for help in paying for prescription drugs, and I am pleased that we are on the verge of providing them with the help they need and health care choices they deserve,” said President Bush, pushing hard for enactment of the new legislation, failing to acknowledge the downside to new reforms. Adding a prescription drug benefit can't be at the expense of sacrificing quality care. Paying $400 billion for prescription drugs does little for seniors if it robs subscribers of traditional benefits, including the right to pick the doctor of your choice. Lining the pockets of publicly insurers and drug companies does little to help the sick and elderly.

      Market-based reforms sound good in theory but ignore the well-established track record of Medicare HMOs. For the last 20 years, senior HMO plans have taken Medicare dollars and delivered inferior care. Once the Health Care Financing Administration pays HMOs, they dole out money to medical groups, typically paying yearly lump sums to manage subscribers' care. Current fee-for-service Medicare rewards doctors for delivering services. Whatever patients need, doctors get reimbursed directly from Medicare for services rendered, though payments are limited to agreed upon fees. Under the new reforms, reimbursements would go directly to HMOs not doctors, forcing medical groups to live within restricted budgets called “capitation,” or monthly amounts to manage patients' care. If patients' care exceeds the budget, doctors must assume the risk of delivering treatment.

      No matter how well packaged, as long as HMOs get paid first, doctors and patients get the short end of the stick. Private competition breaks the back of quality care by bidding down rates, leaving medical groups with less money—and incentives—to deliver quality care. Although 44 senators, including seven Republicans, asked Senate Majority Leader Bill Frist (R-Tenn.) to remove the private competition clause, House Republicans insisted on permanent nationwide competition. Both the health plan and drug industries stand to make untold billions in the current version of Medicare reform. “It is time to put aside partisan efforts to privatize Medicare and get on with the business of enacting workable prescription drug benefit,” said Sen. Edward M. Kennedy (D-Mass.), trying to disconnect the prescription drug plan from special interests in the drug and health plan industry.

      Facing adjournment on Nov. 21, the U.S. the White House and Republican congress would like to complete Medicare reform and a new prescription drug bill. Both the drug and health plan lobby stand to reap billions by privatizing Medicare. Truth be told, privatizing Medicare would save the government billions, but sacrifice quality. Before Congress cows to the drug and health plan lobby, trashes Medicare and turns it into the planet's biggest HMO, seniors must know the repercussions. “America's seniors are a giant step closer to having more health care choices and prescription drug coverage under Medicare,” said Karen Ignant, head of AAHP-HIAA, a trade group representing managed-care providers and insurance companies, proving, if nothing else, that Congress should proceed with the utmost caution. Getting such endorsements should raise some serious red flags

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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