Physicians' Perspective: Privatization of Medicare: Fake Left, Run Right
by Rick Bayer
Consumers Union (CU), publisher of Consumer Reports, recently issued an analysis of current legislation in Congress about Medicare prescription drugs. CU challenges claims that these bills provide relief needed by the millions with no prescription drug coverage.
CU’s director of Health Policy Analysis, Gail Shearer, said: “This looks like a prescription for failed expectations. The results with regard to Medicare beneficiaries’ out-of-pocket costs are most disturbing. Consumers may be shocked to learn that the Medicare prescription drug bills currently being fast-tracked in Congress aren’t going to help them .... In fact, the combination of skimpy benefits and the historically high growth of prescription drug costs means that most consumers who lack [prescription] coverage today would wind up paying more for prescription drugs in four years than they do now.” She also said, “Congress should provide Medicare beneficiaries with true relief from skyrocketing prescription drug costs by designing a comprehensive benefit package and allocating additional funding ... Consumers should demand that the government use all tools available to rein in the growth of drug prices. For instance, loopholes that delay introduction of generics should be closed, and the federal government’s purchasing power should be used to its fullest to negotiate low drug prices. Unfortunately, the Senate and the House Medicare prescription drug bills fail to get the job done.”
In a recent issue of The Nation, Trudy Lieberman wrote an article Privatizing Medicare. She states that talk of a drug benefit for Medicare patients obscures the real reasons Republicans are pushing for this particular type of “reform”. Congress has introduced a confusing benefit package that makes no effort to control the costs of drugs provided by large pharmaceutical corporations. She believes many in Congress have a separate agenda to remove government from the Medicare business. I agree.
In my last Alternatives article, I reported that overhead costs for Medicare approximate 3 to 4%—much lower than private insurance overhead costs averaging 15 to 25%. To many private insurers, cost-efficient Medicare represents dreaded competition. Many in Congress feel they need to protect the private insurance and pharmaceutical industries (a.k.a. large donors to re-election campaigns). And, the last thing Republicans would do is demand that costs of drugs be lowered.
The Republican scam is to herd Medicare patients into private managed care organizations like HMOs, which provide benefits in lieu of traditional fee-for-service Medicare. The government then provides private managed care providers with subsidies to cover such benefits while fiscally starving public sector Medicare.
In 1997, when Congress got tighter with Medicare funding, HMOs said they could not afford to take care of seniors. The “Medi-gap” plans offered by insurers to Medicare patients dried up or became much less generous and raised premiums dramatically. In response, patients (particularly sick ones) flooded back into traditional fee-for-service Medicare.
The good news is that traditional Medicare still functions at a baseline level and the single risk pool (all seniors in—no seniors out) provides a model of efficiency. The bad news is that Medicare is so starved for funds that they plan to further decrease payments to physicians. The lower payments to doctors mean that doctors choose between seeing Medicare patients at a loss or limit the number of Medicare patients. Starving Medicare is a fiscal formula that limits access to health care and pushes both patients and doctors into the grasp of large private managed care corporations. Republicans want more patients in HMOs so they can move faster down the path to subsidize private insurance while destroying public insurance (Medicare). The current drug benefit contest is a perfect vehicle to achieve this. Some Demos in Congress meekly go along with the Republican agenda using the excuse that, though the benefits are skimpy, “something is better than nothing”.
Privatization of Medicare pushed by Republicans is a part of the ideology to roll back social reforms of the 20th century including Social Security, Medicare, Medicaid, Welfare, and progress in public education, environmental issues, and civil liberties. The pattern is clear and consistent. Next year’s elections will be very important. Ms. Lieberman reports from Capitol Hill that if Republicans widen their majority in Congress in 2004, “that could mean the end of Medicare as we know it, opening the possibility for a return to the days before 1965, when the nation’s elders went without insurance and without healthcare”.
Rick Bayer, MD is board-certified in internal medicine, a fellow in the American College of Physicians (FACP) and co-author of Is Marijuana the Right Medicine For You?. He manages www.omma1998.org and supported the single payer healthcare ballot initiative in Oregon during the last election.
