|The politics of US Medicare "reform": cynicism, cowardice and social reaction
By Kate Randall
30 June 2003
Only the incurably na´ve could believe that the most reactionary
administration in American history, and a Congress controlled by a party
that has opposed Medicare from its inception, have suddenly embraced a huge
expansion of the federal program that pays for medical care for the elderly
and disabled. Yet that is the picture being presented by the American
media, which has largely hailed Friday's passage by the House and Senate of
conflicting bills establishing a limited prescription drug benefit under
Because of the major differences between the House and Senate bills, it is
entirely possible that no legislation will actually be adopted and the
prescription drug plan will be stillborn. But even if the program is
finally enacted and signed into law by George W. Bush, there is still no
guarantee that the federal government will pay for a single prescription
for a senior citizen. Neither bill provides a penny for prescription
benefits until 2006, when the federal budget is widely expected to be in
such a crisis that drastic cutbacks, not increased spending, will be the
order of the day.
The real purpose of the legislation, as far as Bush & Co. are concerned, is
to provide political cover for the 2004 elections, allowing the
administration to disguise its single-minded pursuit of tax cuts for the
wealthy and resume the cynical pretense of "compassionate conservatism"
that was dropped so abruptly after the 2000 campaign. In the longer term,
the administration's goal is to destroy Medicare as a federal guarantee of
health care for the elderly, not expand it. This is demonstrated by
provisions in the current bills, especially the House version, which create
loopholes to promote privatization.
As for the congressional Democrats, they have largely embraced the position
of Senator Edward M. Kennedy, the leading Senate liberal, that it is better
to make a deal with the Bush administration, whatever the terms, than to
fight it. This kind of political cowardice characterizes the Democratic
Party in every sphere, above all in its support to Bush's invasion and
occupation of Iraq. It is particularly grotesque in relation to Medicare,
where Democrats claiming to uphold and strengthen Medicare as a universal
social program have made common cause with Republicans whose avowed goal is
to put an end to any government role in the provision of health care, and
turn the elderly over to the tender mercies of the capitalist market.
The making of the legislation
Both versions of the legislation, passed in the early morning hours of June
27, provide extremely limited drug benefits-and in some cases no benefits
at all-for beneficiaries of Medicare, the universal entitlement program
that pays for health care for the country's 40 million citizens over the
age of 65. Both versions are estimated to cost $400 billion over 10 years,
only 22 percent of the $1.8 trillion seniors are expected to spend on
prescription drugs over that period. This was the amount set down by the
Bush administration in its initial proposal to Congress, and accepted by
The two bills open up the program to private market forces and will benefit
the pharmaceutical and insurance industry far more than American seniors,
many of whom are already spending a disproportionate part of their incomes
on prescription drugs. The Medicare program would administer and partially
subsidize the prescription drug benefit, but both plans assume that private
insurance companies would provide the actual coverage, even though no US
company currently offers such insurance to the elderly.
Both the House and Senate measures call for the expansion of the role of
preferred provider organizations (PPOs), privately run managed care
systems, in Medicare. Bush, who promised drug coverage for seniors in his
2000 election campaign, initially sought to use the prescription drug
legislation as a mechanism to push seniors off Medicare completely and into
privately run health maintenance organizations (HMOs). The first draft of
the legislation produced by the White House would have given only nominal
prescription benefits to senior citizens who remained within traditional
Medicare, reserving most of the benefits to those who enrolled in HMOs.
Nearly 90 percent of the elderly have stayed with the traditional
fee-for-service plan, frustrating the efforts of the right-wing free-market
proponents, who want to dismantle the popular program and force the elderly
to "choose" the more restrictive private plans.
Bush was forced to abandon this heavy-handed effort to promote
privatization and ultimately backed the passage of a prescription drug
plan, whatever the form, through both houses. This proved more difficult in
the House of Representatives, where the extreme right of the Republican
Party exercises its greatest sway; the bill passed by a single vote,
216-215, when several Republicans switched their votes after the initial
roll call showed it would be defeated. Bush invited House Republicans to
the White House Wednesday to urge passage of the legislation. A section of
ultra-right Republicans are opposed to any legislation expanding benefits
and felt the House bill did not go far enough in injecting private
competition into Medicare, thereby setting the program up for destruction.
Though the current legislation does not dismantle Medicare, it makes
serious inroads in this direction. After seven years, the House version
would require the traditional fee-for-service part of Medicare to compete
with private health plans, throwing all Medicare services open to private
Most House Democrats opposed this legislation as a move towards dismantling
Medicare. Rep. Charles B. Rangel, Democrat of New York, commented, "This is
the first step that has been specifically designed not to reform the
Medicare system as we know it, but to dissolve it." One of the authors of
the House bill, Rep. Bill Thomas, Republican of California, countered,
"Some of our friends on the other side of the aisle are saying that if this
bill becomes law, it will be the end of Medicare as we know it. Our answer
to that is, we certainly hope so."
The Senate version-sponsored by Senator Charles Grassley, Republican of
Iowa, and Senator Max Baucus, Democrat of Montana-passed by a comfortable
margin of 76 to 21, again with .some Democrats maintaining the drug benefit
was too limited, and some Republicans claiming not enough was being done to
Paltry benefits-if any
While the formulas for benefits in the House and Senate plans are extremely
confusing and convoluted, an examination makes clear that both provide
paltry coverage for prescription drugs for seniors. Both feature a $420
annual premium to be paid before any benefits become available, plus a
deductible-$250 in the House legislation and $275 in the Senate.
In the Senate version, Medicare would cover drug costs at a 50 percent rate
up to $4,500 a year. For costs between $4,500 and $5,800, seniors would
receive no benefits. Then after $5,800-in the so-called catastrophic
coverage category-Medicare would cover 90 percent of costs. Under the House
plan, 80 percent of drug costs would be covered up to $2,000 a year. From
$2,000 to $4,900, seniors would foot all costs. Over $4,900, Medicare would
cover 100 percent of costs.
No logical explanation has been offered for the "doughnut hole" gaps in
both versions-where zero coverage is provided-except that the $400 billion
over 10 years proposed by the Bush administration can only cover so much,
and Republicans and Democrats alike are unwilling to challenge this
woefully inadequate figure.
An analysis by Consumer Reports magazine calculates that the average
out-of-pocket spending on prescription drugs by Medicare beneficiaries,
currently $2,318 a year, would actually increase in 2007 under the proposed
House bill to $2,954, in constant dollars. Under the Senate bill, the
magazine estimates the average spending would rise to $2,524 in 2007,
taking into account premiums, deductibles and co-payments.
Only people with more than $1,100 in drug costs annually would be better
off for enrolling in the drug plan. This means that about two-thirds of
seniors, who spend less than this amount, would gain nothing from the new
prescription drug plan.
In the likely event that healthier people opt out of the Medicare drug
plan, the average cost per member would go up. With the rise in plan costs,
even fewer would enroll, pushing more and more people into privately run
plans, whose profit margins would increase.
Critics of the Medicare prescription measure also warn that employers would
seek to cut back or eliminate drug coverage they now provide to retired
workers. The Congressional Budget Office estimates that 37 percent of
retired employees with company-sponsored coverage would lose it. This would
translate into 11 percent of the 40 million Medicare beneficiaries.
One component of the Senate plan actually punishes those most in need.
About 6 million very low-income seniors would be ineligible for any
prescription drug benefits under Medicare. Instead, they would be required
to get their drug benefits from Medicaid, a health care program for the
poor administered separately by US states. Benefits for these low-income
seniors would vary widely, as drug coverage is not mandatory under Medicaid
and varies widely from state to state. In addition, separating out this
group of beneficiaries undermines the universal nature of Medicare, which
from its inception has provided the same benefits for all seniors,
regardless of health or income.
Given the significant differences between the House and Senate bills, and
the tenuous nature of their Congressional backing, it is uncertain whether
they can even be reconciled into legislation to be signed into law by Bush
later this summer. If a Medicare prescription drug bill is passed, however,
it is clear that the big winners will be the giant pharmaceutical and
insurance companies, which stand to earn billions. Both versions of
legislation place no restrictions on prescription drug pricing, and private
medical insurers will be unwilling to participate unless they are
guaranteed huge profits.
The fate of Medicare
Medicare enjoys wide support among seniors and the US population as a
whole. Signed into law in 1965 by Lyndon Johnson, it remains-along with
Social Security-the last bastion of government-run and financed
entitlements. These programs have been enormously successful, and have
played key roles in improving the health and living conditions of millions
of American seniors.
A poll of 1,424 adults released June 18 by the Kaiser Family Foundation and
the Harvard School of Public Health found that an overwhelming majority of
Americans-63 percent versus 19 percent-prefer Medicare to private health
plans for seniors. This same survey also showed that a majority would also
like to see any new prescription drug benefits delivered by Medicare, not
private plans-55 percent versus 29 percent. In addition, 54 percent said
they preferred a government benefit at least as good as that provided by
employers, even if that meant more government spending and higher taxes.
However, in opposition to this widespread popular support for
government-sponsored health care, these programs have become the target of
the right-wing elements dominating the Republican Party and the Bush
administration. These forces see any entitlement-or any expansion of its
benefits, such as a national health care plan-as tantamount to socialism
and have waged a concerted effort to undermine both Medicare and Social
The role of the Democratic Party has been to enter into a filthy compromise
with the Bush administration and the Republican far right-accepting the
minuscule benefits and the open moves toward privatizing Medicare. Senator
Kennedy, Democrat of Massachusetts, has played a particularly despicable
role, promoting the notion that some prescription drug coverage is better
than none at all, even though the effect of this alliance is to politically
strengthen those who want to do away with Medicare entirely.
The Congressional wrangling over Medicare prescription drug benefits-and
the miserable outcome reflected in both the Senate and House versions of
legislation-demonstrate the impossibility of promoting any type of social
reform under conditions where the political establishment is so dominated
by big business and the corporate elite. Any significant expansion of
public services, let alone the enactment of a universal health care
program, can only come about as the byproduct of a political mobilization
of working people against both parties and the profit system as a whole.
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