'An Opportunity We Can't Let Pass'
By: Source: AARP Bulletin Today Date Posted: 2003-11-26 16:11:00-05:00
Long-awaited but bitterly controversial legislation to add a prescription drug benefit to Medicare was enacted just before Thanksgiving—and after AARP ultimately declared its support for the final package.
Without the broad bipartisan consensus AARP had hoped for, the bill squeaked through the House by five votes (220-215) after strenuous arm twisting by the White House, and passed the Senate 54-44 after stalling tactics, primarily by Democrats, failed.
President Bush hailed the vote as a major victory for older Americans. "Because of the actions of Congress," he said, "the Medicare system will be modern, and it will be strong."
A CLOSE CALL IN THE HOUSE
But the president, who had a strong political stake in achieving a drug benefit before next year's elections, came within a whisker of failure in the pre-dawn hours of Nov. 22 when voting in the House was prolonged three hours until enough Republicans switched to a yes vote.
The package—with a $400 billion price tag over 10 years—is a compromise forged from very different House and Senate bills passed in June. It enraged both left and right wings.
Liberals said it would "privatize" and thus endanger the traditional Medicare program long term, while offering only a skimpy drug benefit. Conservatives said it had produced a huge new entitlement the country can't afford, while failing to "reform" the program with sufficient competition from private plans. In the end, some lawmakers did cross party lines in casting their votes.
Recently AARP had joined Democrats and centrist Republicans in opposing several key GOP proposals. So it surprised many when AARP threw its weight behind the bill five days before it passed the House. It did so after hard and successful bargaining to achieve greater protections for beneficiaries.
"The bill isn't perfect, but millions of older Americans cannot afford to wait for perfect," AARP chief executive Bill Novelli explained. "If we miss this opportunity for getting Medicare drug coverage, the next chance could be years away."
AARP's endorsement—which observers say was critical in passing the bill—angered many Democrats and consumer groups. House Minority Leader Nancy Pelosi, D-Calif., accused the association of being "in the pockets" of Republicans. Her remark mirrored that of Sen. Trent Lott, R-Miss., who last year called AARP a "wholly owned subsidiary of the Democratic Party."
AARP also had to take its lumps from some of its own 35 million members. Within a week of the announcement, 15,000 members had canceled their memberships.
"It was a tough decision for us to make," says John Rother, AARP's director of policy. "There are things in this bill we do not like. Nonetheless, we hope our members will understand that on balance it brings substantial help to more than 13 million low-income beneficiaries and to those with high drug expenses, and it creates a benefit in law that we can build on in the future."
GAPS PERSIST IN COVERAGE
Like other critics, he says, AARP remains unhappy with the large gap in coverage that gives inadequate help to many people in the middle range of income and drug expenses; tying Medicare Part B premiums, which cover outpatient care, to income; and asset tests for low-income enrollees.
But, Rother adds, AARP fought for and helped win some important protections for beneficiaries:
- more generous subsidies for low-income beneficiaries;
- extra incentives for employers to preserve retiree drug benefits;
- eliminating a proposal that threatened retiree benefits by allowing age discrimination;
- allowing enrollees to remain in traditional Medicare if they prefer.
The complexity of the legislation, running to 681 pages, virtually ensures confusion and different interpretations of what the details mean.
Many liberals, for example, argue that enrollees will be forced into HMOs and other private plans to receive drug benefits. AARP analysts say the final bill clearly gives beneficiaries who wish to stay in traditional Medicare the right to receive drug coverage from a stand-alone drug plan—regardless of managed care alternatives in their areas.
Similarly, many critics argue that Medicare drug coverage will encourage employers to drop retiree drug benefits even though the bill's architects added an $88 billion subsidy for employers in a last-minute effort to minimize that possibility.
Two top experts in this field disagree that the bill threatens employer coverage. "Without a Medicare benefit, we think employers are far more likely to eliminate coverage than with it," says Frank McArdle, research manager of Hewitt Associates, a leading human resources consultancy firm.
Dallas Salisbury, president of the Employee Benefit Research Institute, estimates that from 300,000 to 1 million retirees will lose their employer coverage anyway over the next 10 years. But because of the subsidy, he said, "there may well be companies that are able to keep their drug benefits longer than they would in the absence of this legislation."
HOW BIG A PRIVATE ROLE?
The most contentious issue has been a House GOP proposal known as premium support—a system allowing head-to-head competition between traditional Medicare and private plans in the hope of saving money. Many lawmakers—and AARP—vehemently opposed this idea, saying it could eventually destabilize traditional Medicare and require beneficiaries to pay more out of pocket.
The impasse was broken when GOP leaders reluctantly agreed to reduce premium support to a six-year "demonstration project"—an experiment in six metropolitan areas—to test how it might work.
This was a steep climb-down from the original House proposal, and it brought howls of rage from conservatives. For them the drug benefit was largely a price they were willing to pay to achieve their main goal—to "reform" Medicare by injecting competition from private plans. Instead of that, "the bottom line is that the bill would add a universal drug entitlement to a largely unreformed Medicare program," the Wall Street Journal editorialized.
Moreover, many analysts predict that even the demonstration projects won't happen. "It's window dressing," says Robert Reischauer, president of the Urban Institute, a Washington think tank. Past attempts at similar projects have often failed. "So," he says, "I wouldn't spend sleepless nights concerned that these are going to move forward."
It could be argued that AARP, by lobbying hard for the demonstrations, helped fend off privatization. But, says Uwe Reinhardt, professor of health policy at Princeton University, if Bush regains the White House and Republicans strengthen their control of Congress in 2004, they will have more muscle to push for premium support again.
"That's exactly the dilemma we face as a nonpartisan organization," Rother says. "We have to call it straight on the merits of the legislation, not on any idea of who might benefit politically."
There are other concerns, shared by AARP. The law, in a win for the drug industry, prohibits the government from negotiating with drugmakers, as other countries do, to lower prices. And it does not ease restrictions on buying low-cost drugs from Canada.
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