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Down to the Wire on Medicare

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WASHINGTON, Oct 03, 2003 (United Press International via COMTEX) -- The give-and-take in Congress over Medicare legislation has begun in earnest as the House-Senate conference committee tries to reach a compromise on a new prescription drug benefit, working against a self-imposed deadline just two week away.

Both sides passed separate bills last June that create a limited drug benefit, costing some $400 billion over 10 years. The House version, however, also calls for substantially privatizing the huge, government-run entitlement program by 2010 by linking what traditional, fee-for-service Medicare pays to what private plans are bidding for Medicare business. It would move the government -- for the first time -- toward a defined contribution platform, which would what it pays for Medicare, something Republicans consider financially necessary as the 76-million baby boomers prepare for retirement.

Privatization remains the biggest deal-breaking issue for Democrats in both chambers, some of whom in the Senate have vowed to filibuster any legislation containing the House privatization language. Democrats are committed to maintaining traditional Medicare and claim it can be preserved employing only additional tax dollars and some modernization -- such as prescription drug coverage.

The problem is, if the bill dealt only with prescription drugs -- how to divide the $400-billion pie to provide the best drug coverage -- it would face a more promising future.

Privatization is so contentious it will challenge the conferees to meet their Oct. 17 deadline because it represents fundamental partisan differences over how the program should be run.

Marilyn Moon, vice president and director of the Health Program at the American Institutes for Research in Washington -- who in August had given the conference committee a 50-50 chance of reaching agreement -- told United Press International there is less likelihood now the full bill will pass.

"I think there's a sense that people are going to be unhappy with the bill," she said. "I guess I believe the chances for the full bill have slipped to maybe 40-60. Chances for a slimmed down version of low income only plus discounts may have gone up slightly."

Two sets of seniors are lobbying: one that wants a prescription drug benefit in Medicare regardless of its problems or shortcomings, and another that prefers no new bill if legislators cannot provide a comprehensive and affordable program for all seniors.

Karen Ignagni, president of the American Association of Health Plans in Washington, told UPI "Congress should act soon. Members of Congress, when they were home during recess, heard from seniors: 'Get this done and don't come home without it at the end of the year.'"

The conference committee, which has worked throughout the summer on small issues carrying little controversy, this past week jumped to the medium level by addressing how Medicare will deal in the future with 6-million poor seniors who qualify for both Medicare and Medicaid.

The Senate bill would require seniors who qualify for Medicaid to receive all of their benefits from Medicaid -- which is run by the states but co-funded by the federal government. This would put more pressure on already cash-strapped states. Many of them, such as Ohio, have had to rebalance their budgets several times, cutting programs and services -- sometimes including Medicaid. Because Medicaid is run by the states, coverage parameters also could vary widely and potentially be threatened by budget shortfalls.

Moon also noted, in a policy briefing paper published this week through The Commonwealth Fund in New York City, "one of Medicare's strengths is that it treats all beneficiaries the same, regardless of their income level."

The conferees agreed to accept House bill language that would keep dual-eligibles under the Medicare umbrella, a victory for Democrats and a defeat for the Bush administration -- albeit only a modest concession, given the privatization issue has yet to be resolved.

"Medicaid recipients are our poorest citizens and to lock them out of a Medicare prescription drug benefit would be unconscionable," said Sen. Jay Rockefeller, D-W.Va. "I'm very encouraged that other members of the conference committee are finally recognizing the importance of making this drug benefit truly universal and available to all seniors."

The prescription drug problems center around the large coverage gaps written into both proposed bills. They require beneficiaries to pay for all of their prescription drugs at certain cost levels, a degree of complexity leading to confusion and unhappiness among seniors. Further complications arise from issues such as establishing premium, deductible and co-pay levels; providing special help for very-low-income seniors, and using private insurance plans to administer the prescription benefit instead of running the drug program within Medicare.

It remains uncertain whether the private plans -- preferred providers, health management organizations and fee-for-service companies -- will bid for prescription-only drug business in the traditional Medicare program or provide the entire benefit package, including drugs, through an expanded Medicare+Choice arrangement.

Even if the privates cooperate, they might do so only temporarily. They might pull out after a year or so -- as they did in the past with Medicare+Choice -- if the government reduces financial incentives. This development could create chaos for seniors and destabilize the entire program. Whether any of this would save money over the long-term is doubtful.

A new report by Mathematica Policy Research of Princeton, N.J., finds premiums for Medicare PPO demonstration plans are more than two times higher than those for regular coordinated care plans -- mainly HMOs -- in the same area.

"Expanding Medicare PPOs could make sense if the intent is to promote plans better equipped to manage care for Medicare beneficiaries, many of whom have chronic illnesses, although PPOs generally have less ability to do so than HMOs," wrote Marsha Gold, an analyst at Mathematica. "But encouraging private fee-for-service options appears to be inconsistent with this goal. By design, these plans have no provider networks, and for the most part, have enrollees and administrative structures that are widely dispersed."

Gold continued: "It is doubtful that such plans would be better positioned to manage care than Medicare is now. And these plans could cost the government a lot more money if they are used mainly to provide private plan alternatives in rural or other areas paid more than traditional Medicare now pays."

The report said PPOs are not likely to be feasible in all areas of the nation.

President Bush and congressional Republicans have insisted a Medicare prescription drug benefit be tied to Medicare reform -- i.e., privatization. At the end of the negotiations, however, if this idea proves too controversial and if senior voters resent Capitol Hill's inability to produce full-blown Medicare reform, stripping the legislation down to just the drug benefit might become the only saving grace.

Prescription drug coverage, after all, was the only thing seniors were clamoring for anyway. By large margins, they want traditional Medicare kept just the way it is.

Copyright 2003 by United Press International.

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