Health Care

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Persistent Issues: Medicare and the Cost of Prescription Drugs

The Medicare reform bill was signed into law in November 2003, but the issue is still politically potent and likely to affect the outcome of the November 2004 elections.

Investigating Medicare

Democrats have successfully raised concerns about the Bush administration’s handling of Medicare by sparking two investigations.

The first is a General Accounting Office (GAO) investigation of Health and Human Services television spots that advertise the Medicare reforms. The ads reassure seniors with slogans like “It’s the same Medicare you’ve always counted on, plus more benefits like prescription drug coverage" and include images of Bush signing the legislation. Democrats feel that the ads promote the Bush agenda and therefore violate statutes that prohibit the use of federal funds for political purposes.

In its primary investigation, the GAO found the ads “not so partisan as to be unlawful," but the agency plans to further explore the ads’ accuracy. The television spots, as well as mailings and videotapes sent to 10,000 senior centers and retirement communities, may omit important facts and include misleading statements on Medicare.

Quiet on cost

Health and Human Services (HHS) is itself conducting the second investigation. Medicare actuary Richard S. Foster claims that he was forced to keep cost estimates from Congress. Foster says former Medicare administrator Thomas Scully threatened to fire him if he went to lawmakers with the true cost of Medicare.

When writing and passing the legislation, lawmakers estimated the cost of the Medicare bill at $395 billion for ten years. By contrast, Foster estimated the program would cost $551 billion.

In his February 2004 budget proposal, President Bush requested that Congress provide $534 billion for Medicare over the next ten years. Clearly, this figure is much closer to Foster’s estimate than the estimate used to pass the legislation.

In his defense, Scully contends that his comments were merely rhetorical, though he admits being angry with Foster. HHS has since reassured Foster that he will not lose his position.

HHS recognizes that Foster’s charge is a serious one; the legislation may not have passed if his cost estimates were used. While debating Medicare reform, some fiscally-conservative Republicans warned they would vote against the legislation if it cost more than $400 billion over ten years.

Seniors uncertain about new Medicare

At first, the passage of the Medicare prescription drug benefit seemed like a slam-dunk for President Bush, but it now appears as an impediment to reelection. Seniors are suspicious of the Medicare reforms. According to a New York Times/CBS poll, 43% of those 65 and older believe that Bush administration policies have “increased the cost of prescription drugs for the elderly," while 8% feel that the new policies decrease the cost.

Republican and Democratic pollsters agree that the elderly are distrustful of the Medicare changes. AARP has also found that Democrats’ charges have taken hold. The New York Times reports that John Rother, policy director of AARP, has discovered that many of his members agree with Democrats’ claims that the bill favors pharmaceutical companies and insurers at the expense of seniors. The part of the law that is particularly under scrutiny states that the federal government cannot negotiate price with pharmaceutical companies. Large scale purchases are the current mechanism for keeping medicine prices down, i.e., we will buy more from you, if - and only if - you lower the price.

Since the public is not convinced that the Medicare benefit will make drugs affordable for seniors, many are looking towards Canada.

Lawmakers reconsider drug imports

The Medicare drug benefit has not calmed worries about the high cost of medicines. Many seniors fear that they won’t be able to afford all of their medicines even after the full Medicare benefit begins in 2006. Many seniors take overnight bus trips to Canada, where drugs cost an estimated 40% less than they do in the U.S. Such trips are technically illegal, since only drug manufacturers can import drugs from abroad.

To address this problem, Charles Grassley (R-IA) and Edward Kennedy (D-MA) plan to introduce legislation that will allow consumers to import drugs. The legislation may allow importation from Canada only; the details of the legislation are still being decided. At issue is how to guarantee quality control over some of the Canadian sources. Not all are on the approved list for safety.

WomenMatter will keep you posted on Medicare and drug importation. Sign up for our e alerts in Healthcare. Discuss this issue with other WomenMatter readers in one of our online forums, and when you’re ready, contact your representatives and let them know what you think.

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