Medicare Reform Between a Rock and a Hard Place

Published October 1, 2003

Attention to Medicare reform has shifted since Congress left town for the August recess. Medicare dominated the summer debate, but enthusiasm has waned for the House and Senate bills as details have become clearer, especially about the drug benefit.

The August blackout has pushed energy issues to the top of the congressional docket. In addition, the growing danger in Iraq, the California recall election, and the Democratic Presidential race are competing for the nation’s attention. This could mean the imperative to pass a major Medicare bill is waning.

With every passing day, political calculations become more important than policy decisions. A Medicare bill passed the Senate largely because Democrats decided to participate in a serious process to get a bill written. Will Democrats recalculate the odds now that their constituents have seen the details of the drug benefit? Some might conclude they could make bigger political gains by promising a better benefit if they were in control.

That’s not to say the policy issues aren’t tremendously important–they are. But negotiations over fallbacks, premium support, prescription drug reimportation, and rural issues aren’t the only considerations.

Two Big Issues

First there is the creation of a new prescription drug benefit, followed by an opportunity to make critically needed improvements in the Medicare program. Few in the general public are aware these are two very separate issues.

There is a huge opportunity here to make progress on modernizing the outdated Medicare program–a prospect many members oppose–but the price will be a drug benefit, which other members don’t like.

Harvard Professor Bob Blendon observes, “Congress is between a rock and a hard place. Seniors will be critical of Congress if it does not pass a prescription drug bill, but unhappy if it passes either of the current bills.”

On overall Medicare reform, the public is not demanding structural changes because the average person doesn’t see much wrong with the program today.

As a result, Senator Edward Kennedy (D-Massachusetts) can be expected to continue to hold his ground against reform. At the same time, it’s difficult to see Ways and Means Chairman Bill Thomas (R-California) giving in on his visionary goal, shared with Billy Tauzin (R-Louisiana) and others, of making Medicare a modern and competitive program.

Compromise in the Offing

Does that mean we have a stalemate? With a Republican President and Senate and House leaders all determined to get a final bill, I discount critics who say nothing will pass. President Bush, Speaker Dennis Hastert (R-Illinois), and Majority Leader Bill Frist (R-Tennessee) may wind up being primary players in the final negotiations. They can, I believe, get a bill.

But they will need to settle on where they can find a respectable amount of bipartisan agreement. The final compromise may be scaled back from the 2,000 pages of legislation now on the negotiators’ table.

It could include: 1) a more targeted drug benefit primarily for low-income seniors without coverage, especially those with large drug bills; 2) a pilot or demonstration project for a new competitive Medicare program; and 3) some reforms, like disease management, to make traditional Medicare better, with more money to providers and existing plans.

This could mean the 108th Congress makes a down payment on Medicare reform, with more to come.

Grace-Marie Turner is president of The Galen Institute. Her email address is [email protected].