|REP. BILL THOMAS|
Q. Why is the premium support proposal the way to go in reinventing Medicare?
A. Well, it's a way to go, and we invite anyone else to give us any other options that may solve the problem. The problem has evolved over time, and where we are now is that a program that once was relatively easily financed, as most folks' health care costs were, is extremely expensive. The various ways to fix it have been tried - payroll tax, removing the cap, creating a structure which tries to move the government run, administer price arrangement more into the real health care world, and what you need to do when it simply can't be jerry-rigged anymore is to rethink the basic way in which you deliver health care, and retain all of the protections of the current system but simply redesign it, and that's what we're trying to do with the premium support model.
Q. Is it clear that all the protections would, in fact, be maintained because, of course, many of the critics of the proposal argue that they would not.
A. Well, the critics of the proposal will argue a number of things. Frankly, they really cannot sustain the argument that they wouldn't be protected. It would remain an entitlement. There would be a benefits package. The dollar amount may be in question, but that's in question now as we've seen the change in terms of the beneficiary's premium amount. But the amount that the government is willing to support would be locked into law. It would be a fixed percentage of the cost.
Q. Now, again, some of the critics have claimed that the entitlement would be ended, that in fact, beneficiaries would be disentitled under this plan. You say that's not the case.
A. that's just not the case, and of course we haven't written the proposal, and the legislation would have to follow. But if it's done the way Chairman Breaux and I envision it to be done, what will be in place is a guaranteed benefits package, a guaranteed commitment of paying a percentage of the amount, an entitlement to that amount, and that's where we are today.
If someone says that we are changing the commitment because there is not a guaranteed dollar amount that was going to be required of the beneficiary to pay, that's not the case now.
Q. so it is clear in your view that there will be a standard benefits package.
A. Well, when you say standard benefit package, you want to talk about what is a standard benefit package. One of the problems in the old Medicare was that if you get too specific in the package, X number of hospital days, sometimes you can do it at home, sometimes you can do it in an outpatient clinic. But if the only way you're going to get paid is if you meet the specific letter of the law that you do it in a hospital, that's probably not the best practice of medicine.
So what you need to do is talk about what benefits are essential. Some people use the term core benefits. You could use standard benefits. As long as you don't put specific in there, I think we're talking about the same thing. Make sure people know that they're going to get a basic package of health care support needs.
One of the problems with current Medicare is that it's so locked into statute that you have to have this monumental battle, unfortunately sometimes political, to change the law. That only happens every ten years or so. In today's changing health care market, ten year adjustments simply won't get the job done.
The beauty of the premium support model is that it protects that package in law but allows for reasonable changes to make sure that the beneficiaries get the best practice as soon as possible.
The Federal Employees Health Benefits System.
Q. Now, in effect, the structure of Medicare would come to resemble the Federal Employees Health Benefits System. What particularly about that model do you find attractive?
A. Well, that's the only one that's been used. But actually, I don't think if you want to examine the model that that's one that makes a lot of sense because the management structure of the Federal Employees Health Benefits Program is, in fact, an agency, so called OPM. We're really thinking more about a board where you have some very knowledgeable professional people making decisions about what would occur in the field of medicine to incorporate into the plans. Perhaps maybe the Fannie Mae board in terms of dealing with mortgages and the finances would be a better model. But the only one that we have around for quick comparison would be the so called FEHBP. But when you get the details, you'll find that if you simply say what we want to do is put Medicare under a plan identical to the Federal Employees, that's not accurate. We want to put a far better model in place than the one that we have.
Q. Because the Medicare board would play a much more active role in determining what plans could participate, what benefits needed to be covered, etc?
A. No, we would have that core benefits in law, but where someone came in and said this is what used to be done, this is the way we would like to do it, giving you the same basic benefit but in a slightly different way, those judgments need to have a professional group examine them.
If it's too extreme, you may have to come back and discuss a law change. If it's a reasonable extension and, in fact, produces better outcomes at the same or a cheaper cost, you want that put in as soon as possible, so that what you get is a constant review of what's offered, and best medicine is what is decided on.
Q. From the standpoint of the top down approach of the program, I understand you're differentiating between what you have in mind versus federal employees. From the standpoint of the beneficiary, it would be very similar to what federal employees have because they would have a range of plans to choose from, and a defined, if you will, contribution, not to use that term in a technical sense but a specified contribution. So individuals would have this menu of options; correct?
A. Well, they would have the menu of options, but remember it's an entitlement and all of the Medicare guarantees carry over to the board. That is, no one can be denied coverage, so you have -- and plus all of the folks who are in this particular health plan are all seniors, so there are some basic differences.
None of the protections of the federal government as in local parenthesis, in terms of making sure the plans are not fraudulent, that the information given is accurate, all of those would remain in place.
So we're not saying that we're changing the basic support structure. We're saying that the way in which the plans determine how they meet the criteria, and the time frequency in which they can modify that would be done on an ongoing basis given the rapid changes occurring in health care, rather than being tied to statutory change.
We're really talking about a system which incorporate the best of health care faster.
Q. The underlying premise, though, is that individuals in this new system would have an inducement to choose, not necessarily the lowest cost plan, but the one that most expressly met their needs, and that over time that would tend to favor plans that were delivering care very cost effectively; correct?
A. Well, cost effective is the buzz word because the problem with the Medicare system is that they're simply going bankrupt. And what you need to do is incorporate those cost saving devices as quickly as you can. Just as today people have the old fashioned fee for service, but they can try a Medicare plus choice plan which incorporates a number of managed care provisions, and more health care delivery services than is normally available in fee for service.
What we want to do is modernize Medicare. Put some of those protections into the basic fee for service program, but not hinder the ability to make change when change is appropriate, as reviewed by a professional board under a statute for backup.
Q. Individuals would be able to choose among a variety of private plans, as well as the traditional Medicare program.
A. In fact, we're talking about allowing Medicare or the Health Care Financing Administration that offers the government version of health care to compete against itself. There is no inherent reason why regions that HCFA breaks itself into couldn't compete against other regions if they think they could do a better job. It is the key of controlled and managed competition over time that has the chance of saving money.
But as Dr. Tyson said at one of the Medicare commissions, saving money is obviously one of our goals, but putting into practice more efficiently and faster advances in medicine is one of the key reasons we ought to look at the premium support model.
Q. By not having the constraints imposed by a specific payment mechanism.
A. Well, and having the system run, in essence, by the Congress through HCFA and that political decisions always have to be made on the floor of the House and the Senate before medical decisions can be made by HCFA. That's just not a very smart way to run a medical program.
Including prescription drugs.
Q. Now, one of the key areas of dispute among commission members at this point is prescription drugs, whether the prescription drug benefit should be added to the traditional program, what the cost of that would be. What is your view on that?
A. I don't think that there is any fundamental disagreement that prescription drugs have to be incorporated into Medicare. Currently out of pocket costs of seniors cover almost 50 percent of the total health care cost. People who think Medicare pays seniors' bills don't really understand how much is being paid. Sometimes former employers have insurance programs for their retirees. A lot of people pay out of pocket for the so-called wraparound insurance, Medigap. Some people simply pay out of pocket. Others are low enough income that they qualify for the subsidy programs through the state and federal combined financing.
What we really want to do is to take today's Medicare, integrate the program. Drugs are being substituted for surgery more and more. Drugs have to be accommodated in tomorrow's Medicare. How they're accommodated is what the debate is all about. Currently, 65 percent of Medicare beneficiaries get some kind of a drug benefit. What we ought not to do is simply substitute taxpayers' dollars for those private dollars and drive out those private dollars.
What we have to address are the 35 percent of the seniors who don't have any kind of drug coverage at all. If we focus on those in need, and build a plan that incorporates those that already have it, then we can get an effective prescription drug program in a cost effective way.
Q. some of the commission members, though, seem to have signaled that the price of them supporting the premium support plan that will be incorporating a prescription drug benefit into traditional fee for service Medicare; do you think that's likely to be supported broadly?
A. If you examine what they mean by incorporating a prescription drug program into fee for service, that is, if it's a new premium, if it is a shared cost between government and the taxpayer, then there are areas to discuss. But if what they mean is that they want to ignore the 65 percent of the people who currently have a way to get prescription drugs, and that they want to drive out every one of those private dollars because their goal is to create a government plan that runs a government structured and administered drug program, completely paid for by the taxpayers. That is a cost that is enormous, and more sadly, unnecessary because we should be focusing on the 35 percent who don't have prescription drugs.
To ignore the 65-35 split is to want to create a government program financed by taxpayers. That's what got us into trouble in the first place.
Q. The President's proposal to shore up the part A trust fund with a large portion of the budget surpluses, I know that you had objections to that. Why is that not the way to go at this point?
A. Well, if you're going to say that solvency is the part A trust fund, and then all you're going to do is transfer general fund money into the part A trust fund, you really haven't addressed the fundamental financial problems of Medicare. We initially removed the cap on the payroll tax. It's a much more progressive tax than social security.
In 1997 we transferred the fastest growing area of Medicare home health care from the payroll tax to the general fund. To now take general fund money and simply say we're going to dump it into the HI fund and pretend then that we've created a solvency that reaches to 20/20 is playing games.
Now, the President has been roundly criticized for playing numbers games with his budget. Nowhere does this strike more clearly than what he's talking about doing with Medicare. And additionally, he's created a climate which is just really unfortunate.
In his state of the union message, what a lot of people heard - providers, beneficiaries, others - was that the President was saying hey, I'm throwing a $700 billion dollar party and I'm bringing the drugs. It makes it very difficult to get people to realize that decisions are going to make this program work in 2015 and 2020, are not what the president is talking about. It is creating a better program that changes more rapidly, and fixes itself as much as possible.
To argue that solvency is simply putting general fund money into the HI trust fund is meaningless. What we need to do is talk about equity, fair share, the amount that the taxpayers are willing to subsidize other people's health care costs, and that if you'll look at the percent or the amount of the general fund that's going to be expended versus the payroll tax versus the beneficiary's share, that, I think, would be a far better way in tomorrow's Medicare world to talk about solvency. Equity, fairness would be words that would be more appropriate because solvency isn't relevant anymore if all you're going to do is transfer funds from one area to shore up the fund without basic underlying reforms like the premium support model.
Q. do you feel you have a clear signal at this point from the administration on whether it could be supportive of a premium support approach?
A. Well, clear signal is a relative term, but there are a number of people, and I would guess no one more disappointed than Senator Breaux since he's a member of the President's party and I'm not, the President has to step up to the plate. He cannot continue to generalize. He has to either empower his appointees to the commission to be able to negotiate on their own - they're very bright people, they're very knowledgeable, they've been involved in this area for a long time. But if they're waiting for a signal from the White House, we are telling you it hasn't come. Or we need to sit down with whoever the President says are the key people. The President cannot wait for the commission to offer up a proposal. The president's participation is essential in making sure the commission gets the 11 votes.
And the President has an opportunity - he's never going to run again. Post current debate in the Senate. I'm quite sure he would like to chalk up a few victories.
It will be almost impossible to debate this issue if we don't get 11 votes in the commission, because the commission provides the bipartisan support and a specific proposal that would be introduced to the Congress.
To have congress come up on its own after having had the Medicare commission fail, is a probability that it's not going to occur. The President has between now and March 1st to guarantee the maximum possibility of a bipartisan solution to the Medicare problem. Really, the ball is in his hands.
Q. You have had long-standing concerns about how much beneficiaries understand about the Medicare program, how much Medicare makes itself understood to them and so forth, and, of course, the new study seems to indicate that at least a large percentage of Medicare beneficiaries don't understand the Medicare program, don't understand particularly Medicare HMOs. How would you imagine that a new system could be structured so that it deals with some of these problems of lack of understanding the way the program operates?
A. well, actually all the health care financing administration has to do is really copy what the federal employees' benefit program now does in terms of information. They've never done it before, and in our attempt to get them in the newer choice program, Medicare Plus Choice, they have failed to make virtually every deadline in providing the educational information to the seniors. It's no wonder that the seniors don't understand because they've never been given the materials in a way that they could understand.
What we need to do is to understand that there are people who want to make their own decisions. Those people should be provided the opportunity, telephone numbers, and materials to make their own decision. There are others who do not, and in that instance, we have to make sure that we maintain the kind of protections that we have in law now so that whatever the program is that they choose, they have the assurance that the federal government has examined it, it is an appropriate program, and that they should feel comfortable picking a program on price because we will have guaranteed that the content is appropriate and acceptable.
That's how you minimize choice. You create a comfort for those who don't want to make a choice, but you create an opportunity for those who do. And the federal government doing both sides of the street, the government run program and the choice program, has simply shorted the choice program.
The premium support model allows that to occur under a board that wants the government program to be treated equally with the private sector programs, but as importantly, the private sector programs treated equally with the government program.
Q. If the health care financing administration has had so much difficulty meeting these information and education demands, why would we believe a Medicare board would do that job any better?
A. Because if you'll take a look at the health care financing administration, their beginning was a bureaucratic administered price structure. Eighty-five percent of their clientele are still the old administered price government program. They've only recently tried to recreate themselves, reorganize themselves to offer these other programs.
The private sector has been offering these programs for decades, and under a Medicare board, including the government side running the administered fee for service program which HCFA does well, and if we can give them some modernizing tools they'll do better, it doesn't make any sense to try to have the government then run the other side as well. Why not let the people who know how to do it and who have, in fact, been keeping prices down better than the government run that part of it? Why should both parts be run out from under the government. The reason the choice side isn't doing well is because the bureaucrats who know administer prices are trying to run it.
The Medicare board will give an equal weight to both products so that there is a fair competitive structure. Fair competition with a guaranteed package means a better price, with quality, for the seniors.
|Achieving 11 votes.|
Q. If you achieve 11 votes for the commission's recommendation, what do you think will happen?
A. Well, first of all, we'll have a presentation that we can make to Congress under the umbrella of a bipartisan agreement in which the President's folk - the Democrats, the House, the Senate, the Republicans, the House, and the Senate have come together. That creates a significantly different environment for discussion in committees. The chances of moving a product in a reasonable timeframe are greatly enhanced.
Success is - you never say guaranteed, but tremendously promoted by the President's guarantee that we have 11 votes. If he isn't willing to guarantee that, it's back into the pits, and frankly, I will be very disappointed, but I will do the best I can in a climate that could have been significantly different if the President stepped forward and led.
Q. And if, in fact, the 11 votes are not achieved, what happens, do you think, to the premium support idea?
A.Well, it will be in competition with other ideas without the endorsement of the 11 votes of the Medicare commission. If people have better ideas, we would have hoped they would have brought them up in the commission structure. If they don't, then we'll talk about the premium support model in the legislative arena and see if they bring alternate models up there.
It's extremely difficult working with people who only criticize and don't offer constructive alternatives. The President has a chance to guarantee that we don't have to go through that fight if he'll engage, and his commission folks will engage to maximize their chances of getting 11 votes.
I hate to put it this way, but really in this kind of a country on these kinds of issues that are so politically sensitive, we have the maximum chance of getting 11 votes if the President engages. We probably have no chance if the President doesn't engage. And leadership is what's in question right now.
Q. If, in fact, the 11 votes materialize, do you think that Congress, given everything else on the agenda, could actually pass some reforms of this magnitude this year?
A. If we have 11 votes, our chance of passing are pretty good. I'll tell you one thing, if we don't have 11 votes, our chances are a whole lot less.
Q. Thank you very much, Congressman.