Rx FOR MEDICARE
March 4, 2003

Ray Suarez talks to the health unit's Susan Dentzer about the debate over Medicare's future. The NewsHour Health Unit is funded by a grant from The Henry J. Kaiser Family Foundation.

 

Online Special: Prescription Drug Coverage March 4, 2003: Update: Bush outlines his proposed changes to Medicare. Jan. 30, 2003: Analysts discuss possible changes to Medicare. Jan. 16, 2003: Experts debate limits on medical malpractice lawsuits June 7, 2002: A report on many doctors' growing reluctance to treat Medicare patients June 7, 2002: Paul Solman weighs the pros and cons of new medical technologies. Browse the NewsHour's coverage of health   Bush's Medicare Framework The American Medical Association Medicare.gov	RAY SUAREZ: For more on the president's plan and its prospects for the future, I'm joined by Susan Dentzer of our health unit. The unit is a partnership with the Henry J. Kaiser Family Foundation. Susan, today before the AMA, the president gave an outline of his plan redesign of Medicare. What does it look like? SUSAN DENTZER: Well, it looks about like it looked when the president first began to talk about this back around the time of the State of the Union address. Of course he's been discussing the principles of Medicare reform for the better part of two years. Around the time of the State of the Union address some details leaked about the plan. It was envisioned first of all as a proposal that would really amount to not just introduction of a drug benefit but actually a rather substantial restructuring of the entire Medicare program -- with prescription drug coverage, if you will, used as a kind of cheese to lure mice into a new version of the Medicare program. What he's discussing in fact is a system where people would be able to buy a new Medicare package with different benefits than are in the current plan -- for example, more coverage for preventive services than is in the existing Medicare program, more catastrophic coverage at the high end, the existing Medicare program, for example, the longer you're in the hospital, the more you as a beneficiary pay out of pocket to be there. In fact after 150 days in the hospital your Medicare coverage for hospital stays elapses so the president has proposed to attack that, create a different structure for the Medicare benefit package which would include prescription drug coverage and, in fact, lure beneficiaries, some 41 million strong, into that new construct. When details of that leaked back in January and in the weeks leading up to that, many members of Congress, including Republicans, were very alarmed about the idea that people who wanted to stay in traditional old-fashioned Medicare would not have access to full blown prescription drug coverage for outpatient prescription drugs and basically blew the whistle on the president's plan. The president had to essentially take the model that was about to be wheeled into the showroom, cart it back to the production factory at the White House and add a few more bells and whistles. What he discussed today was that new version of the plan -- with one major new wrinkle attached to it, which is that for people who stayed in the traditional Medicare benefit program they would have, if they were low-income beneficiaries, they would get $600 a year to apply to prescription drugs. They would also have access, everybody, in fact, would have access to a Medicare prescription dug discount card which the White House says would entitle you to 10 to 25 percent off the cost of prescription drugs at the retail level. And you would also have some order of magnitude of protection at the very high end for catastrophic drug costs, although the White House has not yet specified what that level would be.
	Adjustments to the Bush plan
	RAY SUAREZ: So the big objection, that people who stayed in traditional Medicare would have no coverage? That's been addressed? SUSAN DENTZER: Yes, exactly. But the coverage for people who would stay in traditional Medicare is pretty scanty. And that is still rubbing many people in Congress in both parties the wrong way. In fact many are going to so far as to say the president's plan at least on that score is dead on arrival. Most of the people in Congress who have taken a stand on this issue prefer a much more broad based prescription drug coverage plan available to people who stayed in the traditional program -- not just available to the people who went into the new version of the program. RAY SUAREZ: And the White House's proposed price tag is still the same as it was back in January. SUSAN DENTZER: Still the same -- $400 billion over ten years, which suggests that the number is driven more by the need to plug into a broader budget context than it is really meaningful related to the policies now under discussion. In fact, most of the Congressional approaches for this would cost many orders of magnitude more, a leading plan that almost passed the Senate last year would cost... is priced nominally at about $600 billion over ten years would probably cost $800 billion over ten years. So many members of Congress are talking about a much broader approach to this, making drugs more widely available to people on Medicare, obviously at higher cost.
	An expanded role for private insurers
	RAY SUAREZ: Does the new plan envision a more prominent role for private insurers? SUSAN DENTZER: Yes indeed. In fact, under this construct of what the White House is calling enhanced Medicare, this new Medicare package with this coverage for preventive services, catastrophic coverage and so on, that would be delivered in essence by private health insurance plans. The model here is the federal employees' health benefits program, which is the way members of Congress and more than 8 million federal workers and their dependents and retirees obtain health coverage now. They essentially leaf through -- it's the equivalent of leafing through a big book every year, picking from among a number of health insurance offerings by private plans, the Aetna's of the world, the Blue Crosses of the world, et cetera, and deciding which one best suits your family and picking that one with the government kicking in a substantial contribution to that plan. So that's the construct that the White House is thinking of here, and that is what they envision as the primary structural reform of Medicare. In fact, what they'd have is all of these private plans coming in to participate in offering this new enhanced Medicare as well as another version called Medicare Advantage, offering those plans, competing against each other for the prices of those plans, and in essence it is hoped holding down the cost increases of Medicare over time by virtue of that competition. RAY SUAREZ: So theoretically if you were 72 years old living in Terre Haute, Indiana once a year you'd get a booklet giving your options for the coming year of coverage let's say. SUSAN DENTZER: That's right. One construct that the White House has suggested is that the country would be divided up into ten divisions. Health insurers would say I'm prepared to cover all of the Medicare beneficiaries within this particular collection of states. They would bid on what they would charge to cover those Medicare beneficiaries, to meet the specified benefits set out by Medicare, and the government would pay some amount of contribution based on where all the bids came in at. Individuals, if they wanted a more lavish plan than what the government is talking about, would have the freedom to pay more to get it and, in fact, might be able to make sure that they had a plan which looked very much like the traditional Medicare program does now in terms of the ability to choose among doctors and hospitals and so on. RAY SUAREZ: But if you're sick, and a lot of elderly people have chronic conditions, you'd still be guaranteed some kind of coverage? SUSAN DENTZER: Everybody in Medicare, the eligibility of Medicare would not change at all from what is currently. You would always have the option, the White House is careful to stress this, of staying in the good, old- fashioned Medicare program. You would just have much less in the way of not only drug coverage but these other services which are increasingly important to elderly individuals. Preventive care, regular screenings, Medicare covers some of those things now like mammograms. It doesn't cover a real broad array of those things. Also as the White House is very insistent on stressing, it leaves people exposed for very high out of pocket costs and hospitalization and in other arenas. In theory that would be eliminated from this enhanced Medicare package. RAY SUAREZ: Susan Dentzer thanks a lot. SUSAN DENTZER: Thanks, Ray.