Congress Falls Flat on Drug Promises
By: Source: AARP Bulletin Today Date Posted: 2006-07-06 09:25:57.804833-04:00
As older Americans head for the polls on Nov. 5, they may well wonder why Congress has failed to honor endless promises to help them afford needed medicines and whether the candidates they vote for now will do any better in the future.
Over the past three years lawmakers have repeatedly pledged, as a priority, to add prescription drug coverage to Medicare or rein in escalating drug costs, or both. So far, they have accomplished nothing.
Hospitals, HMOs and other Medicare providers complain that the 1997 Balanced Budget Act cut their payments too drastically. Congress increased reimbursements by $89 billion through 10-year "giveback" packages enacted in 1999 and 2000.
Those givebacks increased beneficiaries' Part B premiums by $14 billion over 10 years, says Kirsten Sloan, head of AARP's legislative health team, because one-fourth of the premium is based on the total costs of the Part B Medicare program.
A Senate proposal to pay at least $40 billion more to providers over the next decade will raise Part B premiums by a further $6 billion in the first five years alone, AARP Executive Director Bill Novelli warned Senate leaders.
"Changes obviously must be made to correct unintended payment inequities, like those for physicians," Sloan says. "But payments must be kept reasonable.
"It will be a bitter irony," she adds, "if Medicare beneficiaries don't get a drug benefit but instead find their premiums increased to pay higher provider reimbursements."
Congress' failure, despite efforts by AARP and other consumer groups, disappoints millions of older and disabled Americans who must continue skimping on needed drugs. It also leaves the hard-pressed states to try to provide assistance programs and the courts to handle cases of price gouging.
And if the present balance of Congress remains much the same after the election, as pollsters now predict, the standoff could continue into the 2004 election campaign unless lawmakers resolve their partisan differences.
This year was the most propitious time for action, analysts say. "It was an election year in which both Republicans and Democrats saw prescription drugs as a crucial issue with voters," says Chris Hansen, AARP's director of advocacy. "And Congress agreed to $350 billion to $400 billion to fund a benefit for a decade. Without enactment this year, that money is gone and we need to start all over again."
Progress was certainly made in 2002, but Congress ended in gridlock. In June the House passed a limited drug benefit, but in July the Senate failed to pass competing Democratic or Republican proposals. In October Senate leaders gave up trying to forge a compromise.
Conversely, on the issue of drug prices, the Senate passed legislation to allow less costly generic drugs to come to market more quickly. But at press time the House had not voted on a similar bill and looked unlikely to act before the election.
The immediate reasons for these failures are well known. Ideological differences on how much a benefit should cost, how it should be run—through private health plans or directly by Medicare—and how costs should be contained have divided lawmakers mostly along party lines.
Added to that are developments nobody could have foreseen only two years ago: Federal surpluses changed into deficits, a boom economy tumbled into recession and the nation's peace was transformed by 9/11 into war—first against terrorism and soon, possibly, against Iraq.
Yet—when asked what went wrong with prescription drugs this year—public policy experts say the fundamental reasons go deeper than current events or money. This issue, they say, goes to the heart of long-standing disputes on the role of government itself.
ECHOES OF EARLIER BATTLES
The situation today strongly reminds Theodore Marmor, professor of public policy at Yale University School of Management and the author of The Politics of Medicare (Aldine de Gruyter, 2000), of the political battles that were fought out in the years before 1965 when Medicare was finally enacted.
"The logjam was broken long after everyone accepted that seniors had problems getting health insurance, long after everybody agreed they deserved special treatment," he says. Today's struggles in Congress to pass drug coverage, he adds, are "an exact parallel."
In the 1950s and early '60s, the American Medical Association and others lined up against the government using its purchasing power to control costs for Medicare, just as the drug industry is now, Marmor says.
Then as now, there were major rifts on whether the federal government should get into a costly new entitlement program—yet, if Congress went ahead, both parties wanted to take credit for it.
"Deep divisions concerning the proper role of government were at the root of the controversy over Medicare in the first place," Marmor says. "And I think they're at the root of different views on how to do prescription drugs at present."
The Medicare logjam was broken mostly by the Democratic landslide of 1964. But for a time the issue remained stuck between two proposals that represented the differing philosophies of Democratic conservatives and liberals. It was a conservative, Rep. Wilbur Mills of Arkansas, who found the solution: He suggested combining the two.
There is a parallel here in recent attempts to achieve a last-minute compromise in the Senate. That deal proposed combining the Republicans' desire for Medicare drug coverage through private insurance plans with a "fallback" program run directly by Medicare, which is most Democrats' preference.
This dual system would cover beneficiaries even if insurers failed to offer plans in some areas or later withdrew. It would also test opposing philosophical assumptions on which delivery system works best.
But no modern Wilbur Mills has yet pulled that deal off—and no pollster expects a Nov. 5 landslide by either party.
THE PAST SHAPES DEBATE NOW
Ironically, the 1965 Medicare proposal included prescription drug coverage—belying today's conventional wisdom that drugs were not considered important to health care back then. The provision was dropped at the last minute, Marmor points out, because of "unpredictable and potentially high costs."
From 1969 to 1972, the Nixon administration also seriously considered adding a drug benefit to Medicare. Instead, because of growing health care cost inflation at the time, it opted to regulate drug prices in Medicaid, the federal-state health program for the poor.
That alerted drugmakers to the threat of price regulation in Medicare, says Thomas Oliver, associate professor at the Bloomberg School of Public Health at Johns Hopkins University. Today, he says, "they can see that a drug benefit—even if it's not accompanied with price controls at the start—will eventually have those controls" because, if costs rise unchecked, ultimately the government "has to protect its budget."
The third near miss for Medicare drug coverage also helped shape the later debate. That time, in 1988, a benefit was included in a law to protect beneficiaries from catastrophic out-of-pocket costs. It was repealed a year later under pressure from the drug industry and some high-income beneficiaries who objected to compulsory premiums.
That debacle, Oliver says, means that everyone now believes a benefit must be voluntary. And this poses a conundrum that Congress so far has not solved: how to make a benefit that won't break the budget regulation but attracts enough participants to spread the risk around.
That is why the proposed pricetag of $350 billion to $400 billion over 10 years—huge as it seems—has proved a stumbling block. "It is virtually impossible to provide a significant benefit within those dollar constraints," says Stanley Wallack, director of the Schneider Institute for Health Policy at Brandeis University.
NEEDS, PRESSURES WON'T STOP
Whatever the obstacles, few analysts believe that the present drug issue will fade as it did in the '60s, '70s and '80s. Drugs are now central to treatment, and how to pay for them is of huge concern to employers, health insurers and the states, as well as to older Americans.
Millions of younger Americans also look to the future and wonder how they will fare under Medicare after years of drug coverage by employer health plans that may not continue into retirement. To them in particular, says Wallack, "to have a Medicare program without a drug benefit just doesn't make sense."
preview