THE BLOG
07/09/2008 05:12 am ET | Updated Nov 17, 2011

"Saving" Medicare by Killing It : Another Victory For Republicans, Industry and Their Lobbyists

Conservatives in government, free market stakeholders, and their lobbyists won a big one last week. Even after the House gave overwhelming bipartisan support to the Medicare Improvements for Patients and Providers Act (HR. 6331) by a vote of 355-59 (including 129 Republican votes), the Senate fell two votes short of the 60 votes needed to overcome a presidential veto. Presidential candidate Obama voted in favor of the bill; McCain was a no-show. The bill would have cancelled a physician pay cut of 10.6 percent, reduced overpayments to private Medicare plans, improved coverage of mental health and preventive services under Medicare, and added consumer protections for enrollees in private plans. President Bush planned to veto the legislation because of payment reductions to private plans and the improved benefits, claiming that they would "reduce access, benefits and choices for many of the 2.25 million enrollees in Private Fee for Service (PFFS) plans. Robert Hayes, President of the Medicare Rights Center, called this "a craven submission to the insurance industry".

Physicians will now see their already low reimbursement fall by an additional 10.6 percent, many may stop seeing new Medicare patients, patients recovering from strokes and other injuries will face an arbitrary cap on rehabilitative therapy, and 1.5 million seniors and people with disabilities living on less than $1,171 a month ($1,576 for a couple) will be dropped from programs that help them pay for physician services and prescription drugs. Meanwhile, of course, large overpayments to private Medicare plans continue uninterrupted, and Medicare enrollees will likely be faced with less access at higher costs.

Conservatives have long had an agenda to "save" Medicare by killing it (ie., privatize it, and shrink the public program to a much smaller welfare program). As part of the Contract with America in 1994, Newt Gingrich, as Speaker of the House, predicted that this kind of "reform" might solve "the Medicare problem" and cause it "to wither on the vine". All this fits into a larger goal to shrink government.

Conservatives continue to claim that private Medicare plans are more efficient and save money. It is astounding (but hardly surprising) how big the disconnect has become between their rhetoric and reality. Consider these facts:
• Traditional Medicare operates with an administrative overhead of about 3
percent (vs. private plans at least five times higher)
• Medicare plus Choice plans received 13 percent overpayments compared to
traditional FFS Medicare between 1998 and 2000, yet many left the market due to insufficient profits, forcing 2.4 million seniors to find other coverage and often change doctors.
• The Medicare Prescription Drug, Improvement and Modernization Act of 2003 further privatized Medicare by establishing Medicare Advantage as the sequel to Medicare plus Choice, creating the new "more flexible" Private Fee for Service (PFFS) option (even more expensive than other Medicare Advantage plans), and forbidding the government from negotiating lower drug prices with manufacturers, as the VA does so well with 45 percent discounts.
• PFFS plans receive 19 percent overpayments from the government, but often restrict choice and are not available in many areas; in 2005 they overstated their projected payments for medical care and instead took in an additional $ 1.4 billion in profits, according to a recent study by the GAO.

We need to ask where the outrage is with all this. In 1988, Congress passed the Medicare Catastrophic Coverage Act, which required Medicare beneficiaries to pay more than 80 percent of the new benefits themselves. A firestorm of protest erupted. As Chairman of the House Ways and Means Committee, Dan Rostenkowski (D-Ill) had led the way in passing this legislation. When he returned to Chicago, his chauffeured car was surrounded by 50 angry seniors who pounded on the car windows and beat on it with signs protesting the bill. This incident received wide press coverage, forcing Congress to repeal it the next year.

This year's elections give us an opportunity to express outrage again over this latest attack on the Medicare program. As a 43 year old program assuring comprehensive coverage with full choice of physician and hospital for more than 42 million Americans, it has served as a reliable bulwark for guaranteed access for seniors and the disabled. While it needs some reform (especially by eliminating its overpriced and exploitive private plans without offsetting increased value), it can serve as a model upon which to build a single-payer public financing system to cover all Americans while preserving the strengths of our private delivery system.

Adapted from Shredding the Social Contract: The Privatization of Medicare, Common Courage Press, 2006, and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, forthcoming, August 2008. Both books by by John Geyman. With permission of the publisher, Common Courage Press, Monroe, ME.

Order link http://commoncouragepress.com/index.cfm?action=book&bookid=396