On June 27, 2002, the House of Representatives passed a prescription benefit plan for Medicare recipients. The plan, which was developed and passed by the Republican majority, was not well designed.
It called for insurance companies to provide drug-only policies available to Medicare recipients. These policies would pay 80% of the cost of the drugs from $250 to $1000, and 50% up to $2,000. Then there would be a coverage gap until the beneficiary hits a $3,700 "stop-loss" level, at which point the health plan picks up the whole expense. The numbers changed with various presentations of the plan, but the concept remained the same: private insurance and a hole in coverage. Because the system depended on the cooperation of private insurers, there was no assurance that the plan would be available in all parts of the country. Because it called for monthly payments as well as co-payments for prescriptions, a patient could easily lose money through participation in the plan if their expenses were in the range not covered by the insurance.
The Democrats had a far simpler bill, with only one drawback; an estimated price of $800 billion. The Democrats bill was so simple and well-designed that one suspects they presented it so that somebody else, a fiscal conservative if there are any left, would scuttle the proposal. If so, they succeeded. The Democrats' prescription plan never reached the floor.
Medicare was created in 1964 under President Lyndon Johnson because President John Kennedy had made us feel guilty about the way we, as a nation, treated our elderly. The current administration has no similar feelings of guilt.
One might have expected that when the Republicans gained control of the Senate as well as the House and Executive branch, they would revive the earlier proposal. Instead, it appears that the administration has a new offering, although, as the New York Times editorialized on Feb. 2, it has been "maddeningly evasive" about releasing details. "By virtually all accounts" the Times writes " the president wants to offer drug coverage only through private health plans, not through the traditional Medicare fee-for-service system, which insures an overwhelming majority of the elderly. The notion is that drug coverage can be used as a sweetener to entice the elderly toward market-oriented reform of the Medicare system."
This proposal is coming from the same administration that wants to reheat a failed 1975 California experiment in reducing medical malpractice claims. In the case of prescription insurance, the proposal rehashes the Medicare+Choice portion of the 1997 Balanced Budget Act. Under that law, insurance companies were paid by the government for providing coverage to Medicare beneficiaries. The insurance companies were required to provide some additional benefits not available under traditional fee-for-service Medicare, including dental care, prescription drug coverage, vision care, and regular check-ups. An estimated 16% of Medicare eligible patients, about 6.2 million people, enrolled in these plans.
The insurance companies offered their plans with a flourish of trumpets; television ads promising extended care by dedicated healers. They enrolled the elderly and the disabled. Then, when the insurance companies failed to get the level of profitability they wanted, they picked up their bat and ball and left town. According to the web site insure.com, more than 115 Medicare HMOs dropped coverage in at least some areas at the end of 2000, leaving 930,000 elderly and disabled people to grope for health insurance
While Medicare HMOs offer useful benefits, and may be an excellent fit for many people, the Medicare Rights Center has documented questionable procedures by many of the HMOs which, despite their protests, are not in business for anybody's health. Insurers enrolled the cognitively impaired, and non-English speakers who were not provided information in their primary language. People were given improper information and failed to understand the terms and conditions of the HMO they were misled into joining. People were deceived into joining HMOs, and when they went to their usual physician or clinic, not part of the HMO network, were faced with huge medical bills. When the Medicare HMO closed its doors, citing inadequate profits, these same people were left without the information needed to find another HMO or return to traditional Medicare.
Medicare HMOs aren't inherently bad, but corporate behavior often is. Medicare HMOs, without strict regulation of the insurers, has been a failure.
This is the problem of the Bush administration's health policies. Instead of new ideas, it has recycled past failures. The "solution" to medical malpractice claims is a system that failed in California in 1975. The "solution" to high drug costs appears to be a system that has failed almost everywhere since 1997. Neither approach includes regulation of the insurance companies, although that was the step that ultimately fixed the California malpractice crises, and seems essential if HMOs are offered as a replacement for traditional Medicare.
Oh yes, according to the Center for Responsive Politics, the insurance industry gave over $34 million in political contributions in 2002, with 70% of it going to the Republicans. Lawyers gave over $100 million, with 71% going to Democrats.
Sam Uretsky is a writer and pharmacist living on Long Island, N.Y.