Medicare: No Deal
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SUSAN DENTZER: By design, the 16-member bipartisan Medicare commission was composed of equal numbers of Democrats and Republicans. But as the panel prepared for its final vote today, it was disagreement among Democrats that seemed most likely to sink the reform plan of the panel’s chairman, Senator John Breaux of Louisiana. Although Breaux’s plan had already garnered the support of Democratic Senator Bob Kerrey of Nebraska and the panel’s eight Republicans, negotiations to bring more Democrats on board fell apart only recently. At a press conference yesterday, Breaux blamed that on the top Democrat in the White House, President Clinton.
SEN. JOHN BREAUX: Do I wish that he would endorse it, and the answer is obviously yes. Am I disappointed if he doesn’t? And the answer is also obviously yes.
SUSAN DENTZER: The president now says he will introduce his own plan for reforming Medicare and forward it to the Congress for consideration.
PRESIDENT CLINTON: I think it is now incumbent upon me to present an alternative proposal, and I will do that. But I want to make it clear that I believe we owe it to the American people to make an agreement this year, and I’m going to do my dead-level best to get it done.
SUSAN DENTZER: Breaux complained that the president declined to pressure four presidentialappointees on the panel to vote for his reform plan. That plan would restructure the federal health insurance program for the elderly and disabled around a concept known as “premium support.” In essence, the plan would transform Medicare from a program that mainly pays doctor and hospital bills into one that allows beneficiaries to choose among a range of health plans, from privately run HMO’s to the traditional Medicare program. On average, the government would contribute 88 percent of the annual premium for the plan, and beneficiaries would pay the rest. Proponents argue that the change would encourage competition among health plans, slowing the growth of Medicare spending and saving trillions of dollars over the long haul.
REP. BILL THOMAS, R-California: This proposal deserves to be law; it deserves to be law before the 2000 elections.
SUSAN DENTZER: Although President Clinton has voiced support for Breaux’s efforts, his advisers say that the Breaux plan has major shortcomings. Unlike Breaux, for example, the President wants to broad and affordable coverage provided to Medicare beneficiaries for outpatient prescription drugs. He also wants to use $700 billion in future federal budget surpluses to shore up Medicare’s Hospital Insurance Trust Fund.
PRESIDENT CLINTON: Even if all the changes recommended by the Commission were adopted, because of the projected inflation rates in health care costs, it would not be sufficient to stabilize the fund. Only by making this kind of commitment can we keep the program on firm financial ground well into the next century. Every independent expert agrees that Medicare cannot provide for the baby boom generation without substantial new revenues.
JIM LEHRER: Susan Dentzer is here now.
JIM LEHRER: Susan, is there a simple one explanation as to why the commission couldn’t reach agreement?
SUSAN DENTZER: Jim, in a way, I think thecommission was doomed from the moment it was set up from the Balanced Budget Act of 1997.
The Commission was, in effect, handed some very conflicting objectives – on the one hand because the population of age is going to double over the next 35 years — spending on Medicare will double both as a share of the federal budget and a share of the economy, and there was concern that that was unsustainable and that ways had to be found to reign in the cost of Medicare. On the other hand, it’s also broadly agreed that Medicare is just an inadequate benefits package for beneficiaries today.
If you took the top health insurance plan in the United States and said that was 100 percent, Medicare is at 20 percent of that level in terms of the benefits it covers. It has high deductibles. It doesn’t cover outpatient medication prescription drugs. It has a number of other inadequacies. If you put those two objectives together and tell a Commission to address them both, it’s not likely that you’re going to come up with a plan that pleases everybody.
JIM LEHRER: And was the division roughly along those lines, those who wanted to do the first part of what you were talking about and those who wanted to do — in other words, fix the beneficiary plan, that was the president and some of the Democrats, right?
SUSAN DENTZER: Yes, that’s correct. The division was in part along those lines, but also it was along other problems as well. Many people, although they thought that the premium support plan was in concept a good way to go, were troubled by the fact that many of the details weren’t spelled out, and frankly they had questions about whether it would hurt beneficiaries in the long run, whether, in fact, Medicare recipients would end up paying more for not much more in the way benefits than they already had. So, there were lots of different competing disagreements here on very many different levels.
JIM LEHRER: Now, just so we understand, this was called the Breaux plan, was it literally Senator Breaux’s plan or was it a plan that he put together with the help of other members of the commission?
SUSAN DENTZER: It was primarily driven by Senator Breaux and some advisers to him among centrist Democratic policy organizations. It was also, however, very much supported by Congressman Bill Thomas, who we saw in the piece who is a Republican. And, in general, one can think of it as a plan that drew a lot of support from centrist Democrats primarily that got some additional support from Republicans — even Republicans who would have approached a different approach were in the en trying to try premium support.
JIM LEHRER: Now, Senator Breaux, as you said in your piece, was upset that the President didn’t put some heat on the presidential appointees, his four presidential appointees. Was that an option for the president? Do you think that if he put the heat on, they would have drawn fire and gone with Breaux?
SUSAN DENTZER: The President, in effect, probably would not have done that. He appointed people who are well known to have many opinions of their own, who are experts in the field, and it was probably unlikely that the President could have muscled them into making a decision that they were loathe to anyway.
They had serious policy substantive disagreements with the Breaux plan, not the least of which was the question about how much in the way of new general tax revenues would be put into Medicare. Everybody agrees, as the president said, that there isn’t enough money on the table right now to support Medicare as the baby boom generation retires. The President had proposed a plan whereby, in fact, some of the publicly-held government debt would be bought back and those bonds would, in effect, be transferred into the so-called “Hospital Insurance Trust Fund.”
That was his mechanism for getting more revenues into the program. Breaux said to the President, look, if I say yes to that, I’m going to lose Bill Thomas, one of my members, they don’t want to go with that approach for a variety of reasons. And, in fact, there was a lot of disagreement about whether you should explicitly put on the table a lot of new revenues for Medicare anyway. So all of that sort of came together and led the thing to fail.
JIM LEHRER: Breaux and the president have always been political allies, I wouldn’t say always, but at least on policy issues they’ve certainly been allies. What happened this time? I mean, Breaux seems to be a little hot at the president.
SUSAN DENTZER: A bit, although I will shock you by saying that in Washington some of this is always theater.
JIM LEHRER: Yes.
SUSAN DENTZER: In concept, the president liked the premium support plan, and I emphasize in concept. It’s not too much of a stretch to say it bore a lot of resemblance to the President’s own health care reform plan of 1993 in the essence that it was -
JIM LEHRER: The one that went down.
SUSAN DENTZER: — managed competition. It was the notion of having private plans compete to enroll beneficiaries in fixing the amount of contribution that would be made encouraging competition to contain costs. That was all basically in the Clinton reform plan of 1993. So, in principle, that was acceptable to the president. As always with health care the devil is in the details. The question was: Could a market-oriented plan really work for older and sicker Medicare beneficiaries? Would they in fact end up paying more for not much more in the way of benefits? And, in fact, one of the final sticking points was this whole issue of prescription drug coverage. The president has said repeatedly that a modernized Medicare package must cover prescription drugs. There was some semblance of a prescription drug benefit in the Breaux package, but not big enough, not broad enough, not subsidized enough to satisfy the president.
JIM LEHRER: And also, not to satisfy liberal Democrats.
SUSAN DENTZER: That’s right.
JIM LEHRER: That’s a big part of their proposal also from the very beginning.
SUSAN DENTZER: That’s right.
JIM LEHRER: All right. So, what happens next, Susan?
SUSAN DENTZER: Now I think the president’s folks scurry to put together a plan, it came as a bit of surprise to them that the President now wants -
JIM LEHRER: Nobody assumed this thing was going to work – I mean, that’s what you have commissions for is to come up with agreements, right, and this one — it didn’t work.
SUSAN DENTZER: Well, I would say many hoped the commission would work, but a lot of people assumed from the start even just the political composition, if you have eight Democrats and eight Republicans, that isn’t necessarily a majority for anything.
JIM LEHRER: But commissions in the past, the Social Security Reform Commission that Alan Greenspan headed several years ago, all these things used to come up with something — but, at any rate, what happens next?
SUSAN DENTZER: I think there’s a hope now the president will put forward a plan again with a prescription drug benefit in it that is financed, paid for somehow, also some more elaboration on what else he would do to modernize the Medicare program. That will go up to the Hill. Meanwhile, Senator Breaux has said that he’s going to put his proposal into legislation, and Congressman Thomas also has plans to start some legislation moving in the House. All of this will come together in what I imagine will be rather furious debate toward the end of this year, probably most likely carrying over into next. It’s difficult to imagine that all of these details could be settled in the time frame left in this year.
JIM LEHRER: Before an election, too.
SUSAN DENTZER: Yes. And quite possibly kick over till beyond the election. There remains some suspicion,possibly well founded, possibly not, that the president would prefer to have the Medicare issue to campaign on, that Democrats would prefer to have the Medicare issue to campaign on, and that to the extent they might do a deal with Republicans this could hurt them in the 2000 elections.
JIM LEHRER: Well, as they say in journalism, only time will tell.
SUSAN DENTZER: Absolutely.
JIM LEHRER: Thank you.