TOPICS > Politics

Presidential Candidates Trade Jabs Over Medicare Costs

September 17, 2004 at 12:00 AM EDT


JIM LEHRER: Medicare as a presidential campaign issue: This week, the candidates have been trading blows over increased costs for now and in the future.

Susan Dentzer, of our health unit, reports. The unit is a partnership with the Henry J. Kaiser Family Foundation.

ADVERTISEMENT: A 17 percent increase in Medicare premiums; five million more Americans without health insurance. George W. Bush: Wrong on health care, wrong for America.

SUSAN DENTZER: New campaign commercials demonstrate a current tactic in the presidential race: Making mincemeat of the other guy over Medicare.

ADVERTISEMENT: John Kerry: He actually voted for higher Medicare premiums before he came out against them.

SUSAN DENTZER: The target audience for these messages are 42 million elderly and disabled Americans on Medicare. They’re among the registered voters most likely to turn out at the polls in November.

And Medicare is proving to be an especially potent political issue this year. Patricia Neuman is a Medicare expert with the nonpartisan Kaiser Family Foundation, which supports the NewsHour’s health unit.

PATRICIA NEUMAN: Seniors are worried about their drug costs and their health care costs generally. They’ve been feeling the burden of rising health care costs despite being fortunate enough to have Medicare.

SUSAN DENTZER: Sweeping Medicare reforms enacted last year will provide some relief. New prescription drug discount cards created by the law have shaved drug prices somewhat for beneficiaries. And in 2006, a new benefit will take effect that will pay a share of outpatient drug costs for beneficiaries who sign up and agree to pay a premium. Still, Neuman says that prospect hasn’t diminished seniors’ anxiety.

PATRICIA NEUMAN: The law has changed, and seniors know that the new benefit is coming their way, but they’re more negative than positive about the new law. And the main reason, they say, is that they think the benefit won’t go far enough in helping seniors with their drug costs, and they’re worried it’s too complicated.

SUSAN DENTZER: So now President Bush is trying to persuade seniors that the new law is really a boon.

PRESIDENT GEORGE W. BUSH: Medicare is an incredibly important program for our seniors, but it wasn’t modernizing. People say, “what do you mean when you say that?”

Well, Medicare would pay thousands and thousands and thousands of dollars for heart surgery, but it would not pay for the prescription drugs to prevent the heart surgery from being needed.

We have now modernized Medicare to help our seniors. Beginning in 2006, seniors will get prescription drug coverage, and we’re not turning back.

SUSAN DENTZER: Meanwhile, Sen. Kerry argues that the new law is even worse than many already think.

SEN. JOHN KERRY: They passed a Medicare drug benefit that feeds the drug companies and feeds the HMO’s, and they’re more willing to push you off Medicare into an HMO, and they put a $139 billion of windfall profit into the pockets of the drug companies, coming right out of your pockets.

SUSAN DENTZER: Kerry says that if he’s elected, he’ll curb that windfall for drug companies, in part by letting the government negotiate directly with those companies for lower drug prices for Medicare beneficiaries.

The split in opinion over the new law is reflected in a related spat: What’s behind a steep rise in Medicare premiums slated for next year. Those premiums for one part of Medicare are now set to rise 17.4 percent, the largest rate of increase ever, to $78.20 per month.

The premium is set according to a formula written into law.

PATRICIA NEUMAN: This premium pays for the part of Medicare that pays for physician services and other outpatient services. Beneficiaries pay 25 percent of the cost for this part of the program, and this 25 percent portion of the cost is a formula that’s been set into law since 1983.

SUSAN DENTZER: Washington attorney Colin Roskey is an informal adviser to the president’s campaign. He says next year’s higher premium is the price enrollees must pay for the improvements made in Medicare under the new law.

COLIN ROSKEY: It’s a result of an improved benefit package, of benefit enhancements and rising costs for Medicare in doctor payments, new preventive care options in Medicare — like a new free initial screening physical that is now part of the Medicare basic benefit package — and other of the benefit modernizations that were included in the overall basic benefit bill, in addition to prescription drugs.

Those are additive benefits that cost money and contributed to and will continue to contribute to a broader growth in premiums that… that beneficiaries are going to have to absorb.

SUSAN DENTZER: Bruce Vladeck headed the Medicare program during much of the Clinton administration and is now an adviser to Sen. Kerry’s campaign. He rejects Roskey’s explanation for the rising premiums.

BRUCE VLADECK: This notion that they’re going up so much because of the new benefits in the law is nonsense.

The total dollar value of the new benefits are a few hundred million dollars in a program that’s going to spend something like $140 billion or $150 billion. So that’s just not credible.

SUSAN DENTZER: Instead, Vladeck says, the premium hike stems from an overall rise in health spending for care delivered outside of hospitals, as well as new subsidies the law gave health plans to keep them in the Medicare program.

BRUCE VLADECK: In eight years of the Clinton administration, the part “b” premium went up combined 35 percent total over eight years. In the four years of Bush’s administration, it’s gone up 56 percent.

And at the root, the problem of growing health care and drug costs has not been addressed at all in this legislation and is going to continue to get worse until a new administration does something about it.

SUSAN DENTZER: The latest wave of Medicare attacks has focused on a new set of projections about Medicare costs and about how much enrollees in the program will have to pay out of pocket.

PATRICIA NEUMAN: These new numbers show what Medicare beneficiaries are projected to pay in their Medicare premiums, deductibles and cost-sharing as a share of their total Social Security checks.

Health care costs are rising, many seniors are living on their Social Security income, which is fixed, and income is not rising as fast as health care costs.

SUSAN DENTZER: Kerry pounced on the numbers in remarks in Wisconsin this week.

SEN. JOHN KERRY: The out-of-pocket expenses of Medicare have now gone up to 37.2 percent by 2006. That is more than doubled from the 14 percent that I just talked about in the year 2000.

And if you look at how much it’s going to go out into the out years, 2021, almost 50 percent of your Social Security check is going to go to Medicare.

SUSAN DENTZER: Roskey says the president is worried about those rising costs and will tackle the issue in a second term.

COLIN ROSKEY: The Bush campaign is concerned about the continuing growth in medical expenses for both Medicare and non-Medicare beneficiaries and is going to be looking at and working with members of Congress and others to try to find ways to help seniors absorb the rising costs of insurance, be it medical insurance provided by the Medicare program or other insurance provided by an employer-sponsored arrangement.

SUSAN DENTZER: But for now, any broader government attack on health costs will clearly have to await the verdict of Nov. 2.