|SEN. JOHN BREAUX|
Susan Dentzer interviews the head of the National Bipartisan Commission on the Future of Medicare. Commission Chairman John Breaux (D-LA) has proposed revising the Medicare system based on the Federal Employees Health Benefits Program (FEHBP).
Q. Senator, thanks again for joining us. Let's just pick up from what we were talking about, the difficulty of the politics of the Medicare Commission. You were saying -
A. All commissions are interesting because it's generally what Congress does when Congress can't solve the problem ourselves. We generally punt, and we punt it to a commission, and that's really what happened on Medicare, because it was such an explosive political issue that Congress has not been able to come to a conclusion, so we set up a very elaborate commission which I happen to serve as chairman of, and our task is to solve the problem by making a recommendation to the President and to the Congress by March 1st.
The difficulty is that many commissions tend to appoint the experts that represent a certain viewpoint, and it's very difficult to reach a consensus in the middle. We have the commission with eight Republican appointees and eight Democratic appointees, and I sort of jokingly suggested that perhaps the next commission should be a group of smart, intelligent people who know absolutely nothing about the subject matter. It is then they would all come to the table with a completely open mind.
I mean, I have some real experts, but they have strong opinions about what the solution is to the problem.
Q. You sound like a man who doesn't believe he's going to achieve a simple majority.
A. I'm optimistic and think we're going to be successful. I think we'll be successful no matter what the vote is, which is sort of an interesting comment. I think we'll have a majority vote for a recommendation. But Congress, in our wisdom, also said we have to have a simple majority. We have 17 members of the commission. Normally, if you had nine votes, you'd have a majority and it would pass. But Congress said no, you're going to have to have a super majority. You have to have 11 votes. And I am optimistic that we will reach 11 votes or more on a recommendation.
But if we don't, we should not look upon this effort as a failure because we have a year invested in hearings and a lot of very difficult work on trying to reach a consensus. So whatever we come up with, if it only gets 10 votes, or 9 votes, it still could be introduced in the Congress as a package in a bipartisan fashion, and hopefully get the Congress to accept it.
Q. Let's talk about why the commission came into being in the first place, at really the degree of a long-term Medicare problem. In your view how important is it to solve the problem in Medicare's long term financial shortfall?
A. I can't think of any more problem that is more pressing for the Congress to address than Medicare, nor probably more difficult than Medicare. There's been a great deal of talk about social security. The President has said save social security first. But that was not intended to mean save Medicare second. I mean, Medicare is a much more serious problem. Social Security is basically how do you find X number of dollars to pay X number of benefits.
Medicare is about redesigning an entire health care system for 40 million Americans, soon to be 77 million more Americans, and in addition to that, the timing of it is much more critical.
Social Security is A-okay basically to the year 2032. Medicare goes broke in the year 2008, right around the corner. So it's a much more difficult problem to solve, and is a much shorter fuse before you've reached a falling off of the cliff situation; that is, no money left in the program. So I can't think of anything that's more important for us to try and address, and we're going to have to do it in a bipartisan fashion or it won't get done.
Q. Do you think it's adequately understood that the degree of Medicare spending in the future is going to be as large as it is projected to be, doubling essentially, the share in the economy.
A. There is so much misunderstanding about Medicare. Most people who are Medicare beneficiaries don't want us to change anything. But the truth is that Medicare is not that good of a program for the 40 million Americans who are on it. And it doesn't cover prescription drugs, it doesn't cover eyeglasses, it doesn't cover long-term health care. In fact, the evidence says that it only covers about 53 percent of the average beneficiary's health needs. That means that the other 47 percent has to come from somewhere else, out of their pocket or from their family. The average Medicare beneficiary pays over $2,000 a year in out of pocket costs for things that Medicare does not cover.
Now, how I as a Senator, or any member of Congress, or the other 10 million voter employees have a much better system than Medicare. Your company provides a better health package than Medicare. All employers basically provide a better package. State employees have a better insurance plan.
So it's not that good of an insurance plan as we go on to the 21st Century, and in addition to not being that good, it's going broke. So there's a lot of misunderstanding.
Q. Why is premium support the solution to those problems?
A. Well, I think that other areas where it's been tried, it's been proven to be very effective. For instance, the federal employee plan, which I am covered under as well as 10 million other federal employees, basically sets a package of benefits and asks companies to come in and bid for the right to serve the 10 million federal employees.
We have an Office of Personnel Management that can negotiate with all of those companies on the price that they sell that package for, and also the number of benefits that are covered in that package. So there's a lot of negotiation.
What we have in Medicare right now is no negotiation. We just fix prices. And there's no competition because prices are already fixed and predetermined. So you don't get the benefit of the market place and competition and the good things that can be brought about as a result of that.
In addition, if you want to expand a program, you've got to go to Congress. You've got to go to Congress to find out how many aspirins they can give you, how many MRIs they can give you, how many days you can be in the hospital. It takes an act of Congress to change all of that.
It was a great system in 1965, but it's not a good system - it's certainly not a great system in 1999.
The requisite number of votes.
Q. A couple of major obstacles remain in terms of getting even a majority, let alone a super majority on board, one of which is the specificity of the benefits package. What is your sense now about what you are going to put forth? Is it going to be a core benefits package, is it a -
A. Well, I'm willing to look at just about anything that gets us the requisite number of votes that produces a good system. I mean, the argument is from my standpoint, I'm not going to have flexibility in the benefits. In other words, have a core set of benefits package that no one could bid below that, you at least would be guaranteed a minimum benefit package. And then the companies could compete by offering more or a different type of benefits. We shouldn't have to spell out that they have to have X number of days in the hospital, X number of hours with your doctor, or X number of MRIs that can be received or X-rays that can be received, and have them only compete on the price.
I'd like competition to occur on the price as well as on the benefits because a senior could look at plan A and say, this has better benefits. I'll take this one. Or this plan B has better benefits, I'll take this. And have the right to change it every year, depending on what benefits are the best for them, as well as on the price. So you have competition based on price and the benefits.
Now, I understand that there is a legitimate concern that you don't want to have someone bidding a package that doesn't serve the needs of the Medicare beneficiaries, but we will have a Medicare board which will be responsible for that so that they wouldn't be able to gain the system and offer only, for instance, a package that encourages the use of a health club and not many days in the hospital. And because that would attract only healthy seniors and wouldn't be a good package for the rest of the country.
So what I'm trying to do is to reach something that can guarantee at least a core set of benefits which maybe can be more specified than we have them right now, but that's still in our flexibility in the competition of who can offer the best benefits, as well as the best price.
Q. Commissioner Vladeck, as you know, has made the argument that if all you're going to do is guarantee a certain percentage on the premium, then you're really not entitling beneficiaries to what they have now, which is an entitlement to a specific set of services. You're just entitling them to a certain share of premium support which may or may not cover the services in the current program.
A. Well, what we have said is that what we are setting out is an entitlement for every Medicare beneficiary approximately what they have now. Right now the federal government gives about 88 percent of the cost of the beneficiary's benefits, and the beneficiary pays approximately 12 percent. And we're saying let's maintain that ratio. Guarantee that the federal government will pay 88 percent of the national rated average. If you want to buy a plan that costs more than that, you'd have the right to do it, but you would be at your cost. But we would guarantee for the beneficiaries at least 88 percent of the cost would be paid by the federal government for the average cost of the plan.
We also would guarantee lower income people more benefits than they have now. For instance, a drug package which would be paid for by the government, as well as their premiums being paid for by the government, up to about 135 percent of the poverty level. That's much more than they have right now. We would ask wealthier retirees to pay a little bit more - 75/25 instead of 88/12 - in order to pay for the lower income people. But it would be a guarantee, it would be written in law, it would be an entitlement. And I think that that is something that can produce savings for the program, which are very important, and ultimately produce a better product for the beneficiary than they get now.
Remember what I said earlier is that they are paying over $2,000 out of their pocket every year for things that are not now covered, which we would hope to have covered under the new system.
Including prescription drugs.
Q. You brought up prescription drugs, and of course, many members of the commission feel that a prescription drug benefit should be added to the traditional program - some do. But we understand that you discussed with some of the Democratic members this morning a partial benefit which essentially would be, as you said a moment ago, affording Medicaid a way to help pay for those costs, but also simply requiring that Medigap plans all have a prescription drug benefit. We've been told that that doesn't necessarily meet the concerns of some of the members who want a broader drug benefit.
A. Oh, I know some people would like to say we're just going to add more benefits to the current Medicare program and raise taxes to pay for it. That is not politically feasible, and I don't think it's good for the policy. I mean, I think that the current system of micromanaging everything they provide under Medicare, fixing prices for everything whether it's an aspirin, or an MRI, or a surgical procedure is not the best way to manage health care in the 21st Century. It was all right in 1965, but now you see more and more doctors and hospitals refusing to even take Medicare patients because of inadequate reimbursements, because they don't reflect the true market price of the cost of the procedures that they are providing.
So if anyone would argue that we just should keep the current system and add drugs to it, and regulate the prices of drugs as well, I don't think the system can survive. I mean, we're talking about a system that goes broke under the current structure in the year 2008, and it's not a question of just putting more money in the old system. It's also refining the old system and make it function better.
I've compared the idea of just putting more money in the current system to putting more gasoline in a 1965 automobile. It still would have run like a 1965 car. I mean, you have to also reform the basic package as well as add more funds to it to make it work better.
Q. So is your proposal on the table now with respect to prescription drugs as far as you're going to go?
A. This is a work in progress, and it will continue to be until the last time we meet. Trying to bring these two sides together to come up with something that makes sense, that's doable, knowing that neither side is going to be able to have it just like they want. I mean, this is what democracy is all about. It's legitimate compromises in order to fix the - the big problem that we have.
Democrats can't fix it by ourselves, and Republicans cannot fix it by their - by themselves. It has to be a combination working together which necessarily means giving up by both sides.
Republicans have generally argued for a new system, the so-called premium support competition system, and Democrats have said will everyone make sure that you have better benefits and more prescription drugs than we have now, and I understand that it's all very important to both sides, but we're going to have to do something that combines the best of both worlds to reach an agreement. I think we can do that. I'm still optimistic.
Q. Some of the commissioners have said that the commission did not do enough to speak to the public about what the public wants out of Medicare. Do you think if it did do enough to send out individual concerns about the program.
A. Oh, certainly. I mean, can you do more? Yeah, we can spend five years asking people what they think, but we had public meetings, we had field hearings, we've had Internet sites where people can come to talk to us. We've spoken to every group and had them testify who represent seniors as well as providers. There is only so much you can do, in asking what the recommendations are. Eventually you have to make a decision, and that's why we were elected. We weren't elected to only cipher public opinion and to test which way the wind is blowing. We were elected to provide leadership to solve difficult problems.
We have heard from every group that legitimately asked to be heard from in a public hearing, or in private testimony that was submitted, opening up the field hearings, and publishing a newsletter, and being on the Internet, like I said, so we could receive public comment from everybody who was really interested in it. Could you continue to do that? Of course you could, but eventually you have to make a decision, and knowing that we have a deadline. The deadline is right around the corner.
Q. Some argue that the public doesn't - Medicare beneficiaries don't really care so much about choice of plans. What they really care about is prescription drugs and reducing their out of pocket costs, as you mentioned earlier.
A. I had a woman in New Orleans one time tell me that in considering health care - not too long ago. She said, "Senator, whatever you do, don't let the federal government take over my Medicare." And I basically said don't worry, we're not going to let that happen. I mean, she loved the program but didn't want the federal government to have anything to do with it. I mean, she was satisfied the way it is. I think most Medicare beneficiaries are satisfied with the way the program goes now, but it's not a very good deal, and the very good deal is going broke.
And so I think that what we have to do is listen to the recommendations, try to craft a program that works better than the 1965 model that we currently operate under, and make sure that it has the benefits in it that seniors need. Prescription drugs today are as important, if not more important, than a hospital bed was in 1965. It's very important. How do you add something that could cost anywhere from $13 to $40 billion dollars a year for a prescription drugs program and not break the program? And that's the real challenge we have. And I want to have prescription drugs coverage. It's a question of can we do it in a way that we can afford to pay for it. And hopefully we can find a way to do that.
The President's word.
Q. As I understand it, you're going to speak to the President in the next 24 hours to talk about helping to shape the final vote. How important is it for the President at this point to induce some of the other commissioners to support your approach?
A. Well, it's important to have his support for what we're trying to do. I mean, obviously, I think that having him involved in the process is incredibly important, and he has said that Medicare and solving it is very important for him. He said a couple of things that I think need to be noted. Number one, that he wants to put more money into the program, but he also wants it reformed. So no one can say that the President just wants to throw more money at the old program and say we've solved the problem because that doesn't solve the problem. He has specifically said in the State of the Union that he wants the program reformed, and he's willing to put more money into the program, but he does believe in reform.
I mean, this whole concept of framing support really comes from people who were very involved in helping them shape a lot of the things that he has done over the years as president. Everything from community policing, to welfare reform, to charter schools are all ideas that he has had a lot to do with helping reform even before he was president. So I think that the concept that we're talking about is something that is very acceptable to him, and that he would be comfortable with.
Q. The President has proposed the $700 billion dollars transfer of surpluses into part A of the program, and there has been some frustration on the pat of certain members of the commission that that proposal has not gotten attention among the commission, although I understand you have told people recently that discussion could take place around that issue. What do you think could actually pass this commission in terms of an agreement to inject more revenues into the program?
A. It's the old chicken and egg argument, which comes first. You know, some say look, we want reform, and then after we reform it, we can talk about putting more money into it. And there are others who say we want to make sure that there is more money in the program before you change the program, because both sides feel if you do one without the other, you're only going to get one, and it's not going to be the one that they want. I mean, that's kind of a sort of a complicated way of expressing it, but it really is what stage we're at right now because there are some who say reform is really important, and that's the most important thing is get a new system because the old system doesn't work in the 21st Century. And there's a large number of others who say look, if you just put more money in it, that will probably solve the problem. And I think . . . by themselves . . . has to be a combination of the two. And so yes, I'm willing to support more money with the program, but I also want to make sure we reform the program.
How do you get those two to be at the same place at the same time is the challenge that we have.
|The goal .|
Q. What is the most important goal coming out of the commission?
A. I think the goal will be twofold. Number one is to deliver a better package of benefits to beneficiaries than they have today, because what they have today is not adequate. I think it's not even consistent with what everybody else in this country has. And secondly, doing it in a way that we can afford because right now we have an inadequate package that is going broke. And I think that by trying the new system and having guarantees that people are still adequately served will allow us to deliver better services at a better price, and that really is truly the goal of the commission. It's not just to restore solvency, because you could do that very easily by just reducing benefits or increasing taxes. But that's not the answer. The real answer is coming up with a more modern delivery system that works more efficiently, and at the same time is affordable, that can provide a better package than they have.
Q. Let's say Monday, March 1st comes and goes without the super majority and the commission presumably closes its doors. What legacy will it have left behind?
A. Well, I hope that doesn't happen. I think that we have a real chance of accomplishing what we have set out to do. But assuming we don't get the super majority, this work is not wasted. We have spent a year of really in-depth investigation of this whole problem and have come up with some terrific ideas. So if we don't get the super majority that's necessary to make an official report, we can still take what we have and introduce it as a package in the Congress. And I think that perhaps the Congress will be able to look at it with an even broader perspective than just 17 members did, and maybe be agreeable to what we've recommended.
Q. If Monday comes and goes, are you going to ask for an extension?
A. I will ask for an additional period of time if I thought that it would help us reach an agreement. But if everybody is really locked in their positions and saying no way am I ever going to change, well then there is no use to extend it. If, on the other hand, people say I'm willing if I had a little bit more information about how this would work, then I think it would be realistic to request a short extension, but not for too long because it will have no benefit if we wait for too long, because if we don't do this this year in the Congress, I'm very afraid that it's not going to happen in a presidential election year. It has to happen this year.
Q. Great. That's it.