Analysis: Boundaries to [Medicare] reform

WASHINGTON, Aug. 14 (UPI) -- There is broad agreement that the Medicare system is inadequate for its purpose. The current population of seniors and rapidly aging baby boomers constitute more people living longer than the program's designers contemplated when it first went online in 1965.

Before leaving town for the summer recess, the U.S. Congress made considerable progress toward legislation changing this almost 40-year-old program. The Medicare reform package is currently in the hands of a congressional conference committee that must synthesize the bills already passed by the House and Senate into one proposal.

What the conferees have are a pair of bills -- one each from the House and Senate -- each about 1,000 pages long -- that by some estimates represents the biggest single change in U.S. domestic policy since Lyndon Johnson brought the Great Society forward.

The stakes are high. Healthcare is a life-or-death issue for consumers and for politicians. Reform efforts that go awry can end human lives -- as well as political careers.

Health is the largest single sector of the U.S. economy. Any change in the system can have tremendous economic repercussions. The federal government, by virtue of Medicare, Medicaid and other programs, is the largest single purchaser of healthcare in the United States. Government health and healthcare spending has been trending up for almost two decades, representing 45 percent of the total healthcare spending in the year 2000. What government does reshapes the marketplace, as is generally the case when a single purchaser dominates the market.

Many Democrats hope congressional and presidential inaction will produce partisan benefits on Election Day. A number of Republicans believe a presidential signing ceremony is enough to take the issue off the table and deprive the opposition party of a key campaign theme.

There are some who are urging the Medicare conferees to take a bold approach to reform. One is former Speaker of the House Newt Gingrich, who says the time is right for a fundamental transformation of Medicare that would lead the way to a 21st-century system of healthcare in America.

Gingrich, a senior fellow at Washington's center-right American Enterprise Institute, has been studying healthcare issues for the last few years. Co-author of "Saving Lives and Saving Money," a book addressing ways to transform the healthcare system, he outlined his ideas at AEI Tuesday.

The challenge as he sees it is to find ways to remodel the U.S. healthcare system to give consumers more choices, higher quality and lower costs. He says such a transformation could begin with the current healthcare legislation, depending on the approach used by the conferees when crafting the final bill, which then must pass both the House and Senate before being sent to President Bush.

They must decide if they "are starting with boundaries or building blocks," Gingrich says. "Everything hinges on this decision."

If the House- and Senate-passed bills are seen as setting the outer limits of reform the opportunity for transformation of Medicare will be stillborn. "The wrong Medicare conference report will disappoint seniors, fail to prepare Medicare for the baby boomers, increase spending so much that balancing the budget will become impossible, and leave seniors with an error-prone, inefficient system of care that kills people and wastes money," Gingrich says.

The alternative is making the legislation passed separately by each chamber as the first of many building blocks with which to construct a plan for transformation.

Such a report -- "The right Medicare conference report," as Gingrich calls it -- "can save lives, save money, prepare Medicare for the baby boomers' retirement, create drug benefits for seniors and substantially improve America's ability to respond to a biological threat," he said.

One essential element of the transformation, he says repeatedly, is better utilization of technology to coordinate the delivery of healthcare and prescription drugs. According to statistics Gingrich provided, between 48,000 and 98,000 Americans die every year as a result of medical errors while 88,000 die from hospital-induced illness. A new and coordinated information system could provide cost-savings across the healthcare spectrum, potentially tens of billions a year for Medicare alone while saving countless lives.

Whether the conferees heed his advice is an open question. Gingrich believes action is possible sometime in October and that the chances are high for "a remarkably good bill."

The existing evidence on Capitol Hill suggests otherwise. The current prognosis is not encouraging.

The legislation currently before the conferees includes the House- and Senate-passed legislation dealing with the high cost of prescription drugs borne by America's elderly. The original package set aside almost $400 billion over 10 years to subsidize drug purchases by those enrolled in the Medicare system.

The Congressional Budget Office estimates that the plan passed by the House will cost $425 billion over the next 10 years. The Senate plan mandates an expenditure of $432 billion over the same period.

The spending is rising even before the bill is signed into law and no wonder: the total cost of the problem is estimated to be somewhere around $1.5 trillion over 10 years, meaning that Congress is starting off at least $1 trillion in the hole.

Joseph Antos, AEI's Wilson H. Taylor scholar in healthcare and retirement policy, is even more pessimistic about the latest congressional approach to prescription drugs.

In a paper written for the think tank, Antos and co-author Jagadeesh Gokhale point out that "The political debate focuses on the $400 billion cost to taxpayers. But that is only for the next 10 years. This is particularly misleading because it does not account for the increased cost associated with the baby boomers retiring."

"Using the same long-term spending assumptions applied to Social Security, the present value of all future Medicare expenditures associated with the administration's original proposal for extending prescription drug coverage could generate an unfunded federal obligation of $6 trillion," the paper says.

If the existing approach to the prescription drug issue is in fact the precursor of the final package, then the transformation Gingrich hopes to see may be a long time coming.

Conservatives like Richard Burr (R-NC) support Medicare reform but not the spend-spend-spend plan currently being proposed in Congress. I think we need someone other than Denny Haster as Speaker, 'cause this is the sort of thing the House should be driving in a conservative fashion, and it ain't happening.

Thanks for pinging me.

The problem is any mandatory system that kicks in at first dollar for everyone.

Some people have the money and or pre-existing plans that allow them to have better coverage than the government could ever afford them. There is no reason to subsidize Warren Buffet, or even my in laws, who have insurance from retirement plans.

Unfortunately, they were kicked into the Medicare plan for health care, and soon may be for medications. Neither were necessary for them and, so far, the Medicare benefits are not as good as their old retirement health insurances was.
My parents show another side of the story. Daddy has pre-paid insurance and prescription benefits from his retirement plan, but Moma doesn't. Daddy doesn't have to pay a coinsurance on office visits or meds. Moma does, and so she worries that if she ever quits her current job, she couldn't afford her medications.

These four people in my life do not need a one size fits all plan.

Unfortunately, that's all too often the only 'equal" the government can come up with.

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