Health care challenges
© St. Petersburg Times, published October 8, 2000
On health care, America faces some of the most serious challenges and sobering choices in its history, but you'd hardly know it from all the goodies being offered up by the presidential hopefuls. Al Gore and George W. Bush spend much of their time sweet-talking seniors about the merits of their respective prescription-drug proposals. Both skirt the bitter truth: Medicare is headed for trouble and cannot afford an expansion of benefits without major structural changes. The candidates also have paid scant attention to other health care problems, such as how to get insurance to the 42-million Americans, including 11-million children, who now go without.
Prescription-drug coverage is long overdue. In our prosperous nation, it is disgraceful that many needy seniors must choose between food and medicine. But the drug debate should not obscure the hard choices needed to ensure that Medicare survives long enough to make drug coverage a reality.
The next president won't be able to evade Medicare's day of reckoning. Today, Medicare covers just under 40-million seniors and people with disabilities. As baby boomers retire, that number will double, and there will be 40 percent fewer workers per beneficiary paying Medicare taxes. Unless changes are made, Medicare will be bankrupt by 2025.
Gore and Bush would take different routes to head off that disaster, neither of which is adequate. Bush has won praise for acknowledging the danger of runaway entitlements. But his Medicare "modernization" plan, still only a shell, is full of risk that could push up costs for sick seniors and the government. With his 75-page credo, Gore deserves credit for not ducking the details. Yet, for all its girth, even his plan buys only a temporary fix.
Gore would spend more than twice as much as Bush to shore up traditional Medicare, using its current surplus to pay down the debt and reinvesting interest saved in a Medicare "lockbox" safe from congressional poaching. But the surplus he relies on -- projected to grow to $360-billion by 2010 -- is an accounting illusion that may never materialize, especially if the economy cools. Even under the best scenario, Gore would buy the program only five more years of solvency.
Other less-publicized aspects of Gore's plan may actually help eliminate that surplus more quickly. Gore would open Medicare to some 55- to 65-year-olds and assume all costs, now shared by seniors, for screening and prevention. While it would increase what seniors pay for lab tests and index deductibles to inflation, Gore's plan does not significantly adjust the division of costs between government and beneficiaries -- or address how benefits might be cut, or taxes and co-payments hiked, to fund needed enhancements.
If Gore's plan is too much generosity without enough reform, Bush's is too much change without enough payoff. Deferring most details to a future task force, Bush would replace government-run Medicare with a system of private insurers. Seniors would get a voucher to help them buy a "basic" policy from an insurer approved by Washington. Low-income seniors would be covered for free; others could contribute their own money to buy a better policy. Those unable to find insurance could stay in traditional Medicare.
Gore and other Democrats are disingenuous to suggest that private competition would necessarily lead to Medicare's demise. The leaders of a now-defunct Medicare commission urged such a move, and even Gore's own plan, albeit in fine print, would let seniors choose "efficient private plans."
But the free-wheeling privatization Bush envisions leaves too many questions unanswered and too much power with private insurers. Companies could be expected to "cherry-pick" the healthiest seniors, leaving sicker seniors to choose between traditional Medicare or a cheaper managed-care plan, assuming they could find one. Government actuaries predict a Bush-style plan could drive up premiums for the sickest seniors by as much as 47 percent. Bush vows to guard against higher premiums, but he doesn't say how.
A new prescription drug benefit might hasten a return to the days of huge Medicare deficits.
A drug program could triple Medicare's costs, according to the Congressional Budget Office. The candidates should level with voters about the implications of adding to an already-stressed system a major benefit whose costs will outpace contributions.
Both candidates' plans are justifiably generous -- Bush's even a little more so -- to the poorest seniors. Retirees with incomes of less than $11,300 would have their drugs covered at no cost, and those with slightly more income (up to $12,450 for Gore and $14,600 for Bush) would receive partial subsidies. But there the similarities end.
Under Gore's plan, once fully implemented, seniors would pay $600 a year and have half their drug costs covered (up to a maximum benefit of $2,500), with the government assuming all costs once the senior has paid out $4,000 a year. Seniors could expect lower drug prices, because the government would have significant power to negotiate discounts.
Bush takes a more complicated, two-phased approach. For the first four years, he would pay states to offer the benefit. All but the poorest seniors would be covered only when their out-of-pocket drug costs hit $6,000 in a year. After four years, the government would pay 25 percent of private premiums (whatever those turned out to be) and all costs, for drugs and other health expenses, over $6,000 a year.
Bush's first phase does little to relieve middle-class seniors with non-catastrophic bills -- and may, in some states, help no one at all. Fewer than half of the states currently have drug programs, and the National Governors' Association has said that others do not want the responsibility. If states fail to offer coverage, even low-income seniors desperate for help could be left stranded until 2004.
Bush's plan is equally unpredictable after that. With so many HMOs pulling out of Medicare, there is no guarantee insurers would rush to participate. And because HMOs would set premium, deductible and co-pay levels, the resulting costs might prove no more affordable for sick retirees than the expensive and erratic patchwork of private "Medigap" policies available now.
Covering the uninsured
Seniors are not the only ones for whom drug coverage is out of reach. More than 42-million Americans have no health insurance, for drugs or anything else. While the number fell last year for the first time in two decades, experts say it's too early to cheer. This year's rise in health premiums will probably push up the uninsured population, too.
Six years after the failure of Hillary Clinton's massive health care overhaul, neither candidate has offered a big fix. Both would give workers tax credits to buy private policies. Both like the idea of opening up the state-run Children's Health Insurance Program (CHIP) to more children and parents, though only Gore would help states with costs. Unlike Gore, Bush would also increase the amount a worker could invest, tax free, in a medical account.
Many advocates doubt that these reforms would help much. The tax credits appear too stingy to make most policies affordable, and states have proved lax in administering CHIP. Even worse, advocates doubt the issue will receive any more attention after November than it has until now.
The election is less than a month away. After years of Washington's neglect, it is progress that prescription-drug coverage is occupying center stage. But the candidates should start talking honestly about other important health care challenges, too.
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