Health Care

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Warning Letter: Daschle and Friends Tell Bush that Medicare Plan Falls Short

The historic Medicare legislation that would grant prescription drug benefits to seniors is so close to becoming law that Republican leaders can taste it. Both the House of Representatives and the Senate have passed versions of the bill, and a conference committee is sorting out the differences and preparing a final version for Congress’ approval and the President’s signature.

Passing the bill into law would be a major victory for Bush and Republicans in Congress, but may not be a win for seniors. A group of forty-one Senators including thirty-nine Democrats, one Republican (Olympia Snowe R-ME), and one Independent (James Jeffords, VT) believe that the conference committee is crafting a Medicare plan that will do more harm than good.

On October 21, 2003, minority leader Tom Daschle wrote a letter to President Bush in order to express concern with the Medicare legislation. The forty-one senators signed the letter, and forty-one is enough to filibuster.

Warning letter

Daschle has made it clear that the minority is not threatening to filibuster at this time, but he has also stated that the Medicare legislation is unacceptable as is. He is pleading with President Bush to intervene in the negotiations and nudge Republican leadership toward a plan that both sides can accept.

In his letter, Daschle listed six main points of contention that must be resolved for the bill to be approved.

Point #1- the privatization of Medicare

The House bill requires Medicare to begin competing with private insurance companies in 2010. This provision has made it into the newest version of the bill, or, conference report. Democrats strongly oppose the privatization of Medicare; they feel that to privatize Medicare is to destroy it. They claim that once Medicare enters the sphere of competition, premiums and deductibles will skyrocket, causing the poorest and sickest seniors to suffer. They say that this goes against the very nature of Medicare, which is to provide all seniors with equal health benefits, regardless of income or health. Democrats argue that the privatization of Medicare will result in excellent benefits for the healthiest and wealthiest, and substandard benefits for everyone else.

Republicans believe that privatization will drive prices down and quality up. If Medicare is forced to compete, it will have to streamline its operations, cut costs, and offer better care. In their view, the U.S. economic structure will facilitate the changes that seniors would like to see in their healthcare.

This issue represents a fundamental rift between parties. These seemingly irreconcilable views spring from deep philosophical differences about the purpose of Medicare and the way that our economic system affects Medicare. It is unlikely that the conference committee will reconcile this deep schism. However, Daschle and company are not demanding the impossible; they are requesting that the policy treat Medicare and private insurance companies equally, rather than favor PPOs and HMOs.

Point #2- universal drug benefit

Democrats are concerned that seniors in rural areas will not have equal access to the prescription drug benefit. They are insisting that a Medicare prescription drug plan be available in all areas that private companies overlook. HMOs and PPOs do not offer coverage to many rural areas because it is not cost effective.

Point #3- threat to employee benefits

Many seniors get drug coverage through employment-based retirement plans. Democrats claim that the legislation in conference committee will undermine these plans, encouraging employers to drop coverage and cause as many as four million seniors to lose their private prescription benefits. Democrats plead for legislators to include safeguards that will prevent this from happening.

Point #4- low-income seniors

Daschle and his cosigners want to ensure that low-income seniors will get extra help with drug costs.

The conference committee is providing special assistance to about six million low-income seniors. The New York Times reports that the current plan is to eliminate the premium and deductible for seniors who have incomes below 135% of the poverty level (those who receive less than $12,123 a year). These beneficiaries would then pay $2-$5 co-payments for drugs until the cost reached $5,000; Medicare would then take over all drug costs. People with incomes between $12,124-$13,470 would also receive help; they would pay a $50 deductible, sliding-scale premiums, and 15% of the cost of drugs until they spent $3,600 out of pocket. Medicare would then cover the rest.

Yet, Democrats worry that the plan does not protect enough low-income seniors. The conference report disqualifies those with assets amounting to $10,000 or more. For example, a senior who owns her own house or condo but has very little income would not be eligible for special assistance.

Point #5- spending caps

Democrats caution the conference committee not to place spending caps on Medicare. Since Medicare is an entitlement program, all who are eligible must receive benefits. Arbitrary spending caps may limit benefits for some.

Some Republicans believe that spending caps are essential to keeping Medicare spending in check. With the new prescription drug plan and rising healthcare costs, they contend the program is becoming prohibitively expensive.

Some Democrats favor an alternative way to cut Medicare spending - generic drugs and re-imported drugs (drugs that were manufactured in the U.S. but sold abroad for much lower prices). Although American pharmaceutical companies continue to fight against it, some Democrats feel that the best way to diminish Medicare costs is to reduce the costs of the drugs themselves.

Point #6- No tax provisions.

Senators who signed the letter are against new tax provisions that would allow for the creation of tax-free savings accounts. Daschle explains that resources should be used to cover gaps in coverage, not to establish a new tax shelter for those with means.

Political maneuvering?

The Associated Press reports that the letter may be political strategy above all else. Since Bush promised prescription drugs to seniors, there is considerable pressure for this legislation to pass before Election Day. The letter may be the prelude to a filibuster, which would halt legislation and potentially harm Republican credibility.

Democrats insist that they are only looking out for America’s seniors, because the conference report falls woefully short of campaign promises.

WomenMatter suggests that each of us decide for ourselves what is the most important - quality, risk, or cost. To read more about Medicare legislation, click here. To discuss this topic with other WomenMatter readers, click here. Or, contact your representatives and let them know what you think.

Posted on: 10/28/2003

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