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Bush unveils reform plan for Medicare

THE BALTIMORE SUN

SCRANTON, Pa. - In an effort to counter the Democratic advantage on a key health care issue, George W. Bush unveiled a $198 billion Medicare reform package yesterday that includes a new prescription drug benefit for seniors.

Bush's 10-year plan, a response to criticism that his health care reform ideas lack substance, would create a new $6,000 annual limit on out-of-pocket medical expenses for all Americans over age 65.

Prescription drugs for seniors have zoomed near the top of the public's agenda, with polls showing that more voters trust Democrats to handle the issue. The focus on Medicare also reflects both the fact that seniors vote more heavily than other age groups and the lack of a drug benefit under traditional Medicare, which has become a financial burden for many seniors.

Speaking at a senior living center in Allentown, Pa., Bush said he would make his prescription drug plan the second measure he introduces in Congress - after education reform - if he's elected president.

"Keeping the promise of Medicare, and expanding it to include prescription drug coverage, will be a priority of my administration," said the Texas governor, whose plan would rely heavily on private insurance companies.

Bush's proposal includes a $48 billion prescription drug plan for lower-income seniors as a stopgap measure while more long-range Medicare reforms are put into effect under a $110 billion modernization effort.

Under the plan , all insurance companies providing Medicare coverage would be required to include a prescription drug plan and the elderly could use a subsidy paid by Medicare to buy the plan. A new federal agency would regulate the insurers' options.

In addition to the $158 billion in the basic reform package, Bush announced that he would set aside $40.3 billion in his budget over the next 10 years to restore Medicare cuts made under the 1997 balanced budget act. That additional spending would push Bush's total Medicare package to $198 billion over 10 years.

Vice President Al Gore's campaign and some health care experts questioned whether Bush's cost estimates were realistic.

"It doesn't compute,'' says Bruce Vladek, a health policy professor at Mount Sinai School of Medicine in New York.

Vladek, a former administrator of the Health Care Financing Administration in the Clinton administration, also said he doubted whether states are prepared to carry out Bush's plan to run his short-range prescription drug plan through block grants from the federal government.

Only 23 states, including Maryland, have programs that provide supplemental drug coverage. Many of those programs serve relatively few people, according to Vladek, and they may not be geared to handle large numbers of seniors.

From a political standpoint, Bush's proposal may allow him to one-up his Democratic rival on the prescription drug issue. Gore's own plan would be phased in between 2002 and 2008; Bush's is designed to go into effect next year.

"Gore talks about 'the people vs. the powerful,' " Bush said. "For eight years, he has been the powerful, and on health care, he has little to show for it."

But Bush conceded that Medicare reform "will not happen at all" without support from both major parties, something that President Clinton and Congress have been unable to generate.

Donna Shalala, Clinton's secretary of health and human services, pointed out that once Bush's full plan kicks in, it would rely on managed care companies to provide benefits. Managed care companies already are balking at providing those benefits. Last year, Shalala said, 1 million Medicare recipients were abandoned by health maintenance organizations that chose to drop out of Medicare.

"There's no security in what Governor Bush has offered," she said.

In tackling the long-term financing problems of Medicare, Bush said he would not raise the eligibility age or increase payroll taxes. His plan is modeled on a bipartisan measure, co-sponsored by Sens. Bill Frist, a Tennessee Republican, and John B. Breaux, a Louisiana Democrat, that has gone nowhere in Congress.

Under Bush's proposal, prescription drug coverage would be provided free to seniors who earn less than $11,300 a year or couples with incomes under $15,200.

Seniors who earn up to $14,600 a year (or $19,700 for couples) would receive a significant subsidy for their drug costs. This group would include a somewhat larger number of seniors than Gore would cover under his drug-benefit plan.

Seniors earning more than those amounts would have one-fourth of the cost of their drug coverage premiums subsidized by the government under Bush's initiative.

"This plan will mean that every low- to moderate-income senior in America will be able to afford prescription drug benefits," Bush said. "Every single one."

Sally Canfield, a Bush health policy adviser, estimated that 9 million people would be helped by the subsidy for low- to moderate-income seniors. An estimated 12 million seniors do not have prescription drug coverage. Many are on fixed incomes and cannot afford the premiums.

In introducing his plan, Bush delivered a stinging assault on the Clinton-Gore administration's health care record and on the specific proposals Gore has advanced in the campaign.

"Eight years ago, Bill Clinton and Al Gore promised Medicare reform," Bush said. "This is not a time for third chances. It is a time for new beginnings and new leadership."

Prescription drug coverage was included in the sprawling Clinton health reform plan that failed in his first administration.

Gore's prescription drug subsidy would require middle- and upper-income seniors to pay half the cost of their premiums, up to a maximum of $2,500 a year. Gore's plan would also cap out-of-pocket drug costs at $4,000 a year, with Medicare picking up the expense beyond that.

Bush said that the majority of seniors - those who currently pay less than $576 a year for prescription drugs - would lose under the Gore plan. He also criticized the vice president's plan because it would give seniors one chance to decide, at the time they enter the Medicare program, whether to pay for a prescription drug benefit.

"It's the Gore plan for life, or nothing at all," Bush said.

Campaigning in Columbus, Ohio, yesterday, Gore assailed Bush's proposal as unworkable, insufficient and unaffordable. The Bush plan, he asserted, would leave out half the seniors now without drug coverage because seniors with incomes over 175 percent of the poverty level could not afford to pay 75 percent of the cost of their prescription drugs.

"And the biggest problem," Gore said, "is there's no money to pay for it if you give away all the money in a giant tax cut for the wealthy at the expense of the middle class."

For his part, Bush charged that Gore's plan, by putting prescription drug coverage into the existing Medicare system, would mean the federal bureaucracy would effectively control drug prices.

Gore's "hostile takeover of the drug industry" would "stifle innovation" and "dry up the supply of new miracle drugs" by cutting industry profits and thus the money available for research and development of new drugs, Bush said.

Under Bush's plan, which is modeled on the health care program used by 9 million federal employees, seniors could choose each year which plan they wanted.

Bush advisers contended that seniors would be able to obtain coverage, including a prescription drug benefit, for as little as $45 to $55 a month. They based that estimate on current prices for HMO coverage under Medicare.

Gail Wilensky, another Bush health care adviser, said the catastrophic-cost care under the Republican's plan would help eliminate that problem by protecting private insurers from runaway expenses.

Under Bush's proposal, the government would cover all health care costs for seniors over $6,000 a year. During a transition period over the first four years, that limit would apply only to prescription drug costs; after that, it would apply to all health care expenses.

Wilensky, who ran HCFA in the George Bush administration, said the $6,000 limit would also help keep premiums under control.

Critics assert, however, that premiums would skyrocket for plans that offer generous coverage of prescription drugs, because seniors with costly drug regimens would drive up the prices as more of them switched to those plans.

Bush chose to announce his plan in Pennsylvania, a key swing state in the November election that also has one of the oldest populations of any state. The Republican National Committee is blitzing the state's airwaves with an ad touting Bush's Medicare plan.

Bush stressed the need to reform Medicare, which is projected to run short of money by 2025 as the baby-boom generation ages. Gore, he said, would simply patch his prescription drug benefit on top of the existing program.

Quoting Breaux, a Democrat who has said the failure to reform Medicare "is like putting new gas in an old car," the governor argued that the Clinton administration "may have changed the odometer, but it's still not running - and Medicare needs an overhaul."

Bush, whose budget would double funding for Medicare over the next 10 years, sharply criticized HCFA. He said the "top-heavy" Medicare bureaucracy, which is based in Woodlawn, is "a hazard" to the nation's health."

Sun staff writer Jonathan Weisman contributed to this article.

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