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The Great Medicare Fraud

by LEE SUSTAR

It’s A Medicare massacre under the guise of “reform.” George W. Bush’s proposed prescription drug benefit program for Medicare recipients would funnel billions of dollars to the giant health insurance and pharmaceutical companies–and do nothing to stop skyrocketing drug prices from bankrupting millions of seniors.

A plan is urgently needed. Some 30 percent of Medicare beneficiaries lack prescription drug coverage–and those who have it face increased co-pays and deductibles and ever-rising prices. But with their high premiums, gaps in coverage and 2006 starting date, both versions of the Medicare “reform” legislation passed separately by the Senate and the House of Representatives last month fall far short of what’s needed.

“It’s a shameful and tragic scam,” said Dr. Quentin Young, national coordinator of Physicians for a National Health Plan. “Seniors will spend $1.8 trillion on prescription drugs over the next 10 years,” he told Socialist Worker. “The most generous interpretation of the bill on the table is $400 billion [to help seniors pay for drugs]–not an insignificant amount, but not enough to address the total problem.”

Dean Baker, co-director of the Center for Economic and Policy Research, agreed. “Even once the plan kicks in, the average person over 65 will be paying more after the plan is in place than they did in 2000,” he said. “That’s because it does nothing about the growth in drug prices.”

Both the House and Senate bills would set Medicare prescription drug premiums at about $35 per month, and both propose deductibles of $275. The Senate bill would pay half of all drug costs up to $4,500, all costs beyond that point to $5,813, and 10 percent on costs above that amount. The House plan would pay 80 percent of costs beyond the deductible up to $2,000.

But beneficiaries would have to pay anything beyond that amount up to $4,900, at which point Medicare would pay the rest. The result is that seniors at the poverty level could end up paying 41 percent of their income on prescription drugs, according to Families USA, a health care consumer watchdog group.

In other words, the “donut hole” in coverage in both the Senate and House plans could still allow seniors to be wiped out financially. There’s no logic for this gap in coverage–except that it allows Congress to meet its goal of limiting the cost of the plan to $400 billion.

Moreover, the House version would also promote personal medical savings accounts and means tests to qualify for coverage–big steps away from Medicare’s tradition of universal coverage. Even more threateningly, the House wants to allow private plans to compete with Medicare, but would use those private bids as a benchmark for payments for all services.

Wherever Medicare payments are lower, beneficiaries in the traditional plan would have to pay the difference. This would pressure seniors into joining the private plans–leading to what Baker called “the destruction of Medicare.”

And since private plans target healthier people whose costs are lower, those with greater needs would pay more. “It’s a totally rigged competition,” Baker said. “The one thing the private sector is good at is getting low-cost beneficiaries.

Even that’s not good enough for the health insurance companies. In a repeat of the negotiations on Bush’s tax cut giveaway to the rich, corporate lobbyists are scheming with congressional leaders before the closed-door conference committee negotiates the details of the final Medicare bill.

Unless the government agrees to greater subsidies and market flexibility, “few private plans will enter the Medicare market, and the legislation will not work as intended,” the New York Times reported July 1. In fact, a previous attempt to introduce private HMOs into Medicare has already proved to be a failure. The number of private plans covering Medicare patients fell by half between 1998 and 2003. The reason? Medicare just wasn’t profitable enough for the HMO bosses.

Actually, HMOs–which spend 9.5 percent of outlays on administrative costs–are more expensive than traditional Medicare, which spends just 2.5 percent on administrative costs. And since HMOs charge the government for every beneficiary, whether or not that person actually uses medical services, the HMOs got 21 percent–or $5.2 billion–more than what the government would have spent on enrollees in traditional plans, according to Families USA. But that won’t stop Bush’s attempt to wreck the system.

Bush has gotten political cover from an unlikely source: Sen. Ted Kennedy (D-Mass.), long considered the Senate’s leading champion of health care reform. Kennedy claims that whatever its shortcomings, Bush’s Medicare prescription drug plan should be passed to establish a benefit that can be improved on later.

“My feeling is that this is the central copout of liberal leadership,” said Quentin Young. “Ted Kennedy was the author of an excellent single-payer [universal insurance] bill of 1971. But now, since it’s not considered feasible, they don’t even push for it.”

Even without a universal health care system, Young estimated that if the government purchased prescription drugs for resale–as is done in other countries–prescription drug costs for seniors could be cut in half, to $900 billion over the next 10 years. Use of generic drugs over expensive, patented brands could save another $100 billion a year, he said. “But if you do this,” Young said, “you attack the source of profits in the system, and you get enormous resistance.”

If the big insurance and pharmaceutical companies have their way, they’ll stick vulnerable seniors with an even bigger financial burden. That’s why we need to fight for a universal, national health care system–one that puts human needs ahead of profits.

LEE SUSTAR writes for the Socialist Worker. He can be reached at: lsustar@ameritech.net

 

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LEE SUSTAR is the labor editor of Socialist Worker

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