Medicine for Medicare

Marilyn Moon is a senior health policy fellow at the Urban Institute, and a former public trustee of the Medicare Trust Fund.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

WASHINGTON, April 17 (UPI)—Sadly, many in the press are buying President George W. Bush's rhetoric about Medicare reform without closely examining the reality behind his prescription. A Washington Post editorial in March, for instance, accepts the president's claim that his drug proposal is simply adding options for Medicare beneficiaries.

What the Post and others ignore, however, is that allowing choice of benefits through private plans may work for the healthy and wealthy—but not for the vast majority of Medicare beneficiaries. The president's plan gives them the choice between a rock and a hard place.

The president proposes to negotiate with private plans to offer a broader insurance package, including a drug benefit and other protections not found in the current program. Those wishing to stay in Medicare as it currently stands can do so, but will receive only a limited "catastrophic" drug plan.

As a policy analyst, I evaluate this plan by asking a simple question: What would I want my great-aunt Beulah to know about her "options"? Unfortunately, I'd have to tell her that she'd have no easy choice. The problem is this: She needs financial protection for the medications she takes, but she also relies on four doctors now covered by Medicare.

She can choose to stay in the current Medicare program, just as the president points out. That takes care of assured access to her doctors. But she'd barely have a drug benefit. At her income of about $15,000 a year—too well-off for any low-income protections—her drug benefit would likely begin only after she'd spent about $6000 on drugs (along with about $3,000 in other medical expenses to go with it). Even with a discount card, this so-called "catastrophic" benefit would not protect her from financial catastrophe. She'd still have to spend about 60 percent of her income before she'd get any help.

Or she could go into a private plan to get a better drug benefit. That drug benefit would cover more than catastrophic costs, but, given the limited amount of funding in the president's budget, it would leave lots of holes for Aunt Beulah to fill and would likely restrict benefits to only some of her medications.

I'd also have to warn her that only some of her doctors would likely sign up for the plan. She could still technically see her regular doctor, but given the low payment rates that plans typically use, he or she is likely to be "out-of-network," so she'd have to pay much more for a doctor visit than she does today. Aunt Beulah, like most Medicare beneficiaries, can't afford that.

As if these choices aren't hard enough, it's not clear they're really Aunt Beulah's to make. First, Aunt Beulah can't assume that choosing a plan this year will work next year. She needs to be ready each year to shift around as plans leave or raise their rates. We've learned that from Medicare + Choice.

Second, though the president will likely require all private plans to accept all Medicare beneficiaries, many plans will not want Aunt Beulah. She uses a lot of health care. Plans will tailor their benefits, but they'll do so to attract the healthy. Aunt Beulah doesn't want a health club membership; she wants good home health care. And the plan that covers more benefits and meets her needs will cost more.

If your notion of changing with the times is to reform Medicare to meet the needs of the healthy and wealthy, this is your plan: Most of the new money the president proposes to spend would go to that segment of the Medicare population. But my great-aunt Beulah won't get the help she needs.

It's because of the Aunt Beulahs, who are short-changed by this proposal, that health policy experts—not just advocates and politicians—are making loud noises in opposition.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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