From CBS, 11/20/03:
http://www.cbsnews.com/stories/2003/11/20/opinion/main584722.shtml

(The New Republic) Story: This commentary from The New Republic was
written by Jonathan Cohn.


There's a long list of people -- from insurance companies to
prescription drug manufacturers -- who got exactly what they wanted,
and then some.

Magically enough, they also happen to be groups that have spent a ton
of money financing political campaigns and then lobbying the members
they helped elect.

First on this list is the pharmaceutical industry.

The Medicare compromise pumps $400 billion over ten years into the
purchase of prescription drugs.

Some of that money will simply displace money people already spend on
their own, but much of it will be new money that would not otherwise
have been spent.

For the drug industry, that means more revenues and profits.

But even more important here is what the government isn't doing:
forcing down drug prices.

Because private insurance companies, and not the government, will in
theory be administering the benefit, the government won't have the
power to bargain with drug makers the way that foreign governments do.

Meanwhile, drug company lobbyists managed to gut a provision that
would have legalized limited re-importation of drugs from Canada,
where prescriptions cost less.

Also gone is a proposal that would have eliminated some of the legal
tricks drug makers use to thwart competition by generic manufacturers.

So the drug industry ends up with bigger sales but no pressure to
lower its prices.

Pretty sweet.

Apparently that $22 million the industry spent on political
contributions in 2002, 80 percent of it on Republicans, was a
worthwhile investment.

It turns out that the insurance industry has also given a lot of money
to political campaigns, most of them Republicans.

And -- surprise! -- they make out extremely well, too.

The compromise envisions the insurance companies playing two roles in
the new Medicare universe: as a provider of stand-alone drug benefits,
to those beneficiaries who wish to remain in traditional Medicare, and
as a provider of traditional Medicare services plus drugs, for those
beneficiaries willing to opt out of the system altogether and go with
a private plan instead.

Because participation is entirely voluntary for the insurance
companies, the compromise authorizes the federal government to spend
up to $12 billion effectively bribing companies to enter the program
and then stick with it.

In other words, the insurance industry gets extra money to take on
more customers -- plus the right to drop out whenever they decide the
business is no longer sufficiently profitable. What else could they
want?

Medical providers -- i.e., doctors -- are not exactly big fans of the
private insurance industry.

So you might think they'd oppose this compromise, given that it means
more Medicare recipients will end up in managed care.

But, no, they like the plan, too.

And who can blame them?

Buried within the text of the bill is a 1 percent increase in the
money Medicare pays physicians -- this instead of a 4 percent decrease
that the existing formula would have imposed.

So the doctors get more money out of a bill that's supposed to be
about giving seniors assistance with prescription drugs.

Again, not too shabby -- although, again, not so surprising given that
health professionals donated $42 million in the 2002 elections,
two-thirds of it to the Republican majority.

This explains why, for all the talk about making nobody happy, trade
groups are tripping over themselves to push the bill through Congress.

As Robert Pear and Robin Toner reported this week in "The New York
Times," the former chief of staff to House Majority Leader Tom DeLay
is coordinating a massive lobbying effort by everybody from the
American Medical Association -- which vowed to "blitz Capitol Hill
with an advertising and grass roots campaign" -- to the American
Association of Health Plans -- whose director declared that "America's
seniors are a giant step closer to having more health-care choices and
prescription drug coverage under Medicare."

Of course, given the fundamental irrationality of the American health
care system, sometimes doing the right thing in the long-term -- i.e.,
reforming Medicare -- requires doing the wrong thing in the short-term
-- i.e., buying votes by subsidizing politically influential interest
groups.

But far from doing the right thing in the long-term, this bill
actually makes Medicare less efficient and undermines its long-term
financial stability.

It does this, first, by trying to introduce more competition into
Medicare -- a cause Breaux and others have championed for years.

In addition to authorizing a future demonstration program in which
private insurers would bid for business against traditional Medicare
in up to six communities, competition advocates secured financial
incentives that would entice more insurance companies to offer
Medicare benefits under the existing Medicare-plus-choice program.

If this works, it would shift more people out of the old,
government-run program and into private managed care plans.

Breaux and his allies justify their position by arguing that the
private sector can adapt to changing medical technology and public
health data more quickly than the Medicare bureaucracy -- and that the
private sector is, by definition, more efficient than a government
program.

But it's not clear that either argument is true.

Medicare certainly has its problems, but it incorporates new
treatments pretty quickly -- so much so that much of the private
sector frequently takes its cues from the program.

And, assuming your measure of performance is the share of insurance
spending that actually goes to medical care, Medicare is actually more
efficient than the private sector.

In traditional Medicare, just 2 percent of the money goes to overhead.

Private sector plans, by contrast, spend an average of 15 percent on
overhead.

That might seem counter-intuitive if you assume, as many Americans do,
that government is inherently inefficient.

But it makes sense when you consider that the government doesn't have
to spend money on advertising, among other things.

Not only does this brand of "competition" not make Medicare more
efficient; it dramatically depletes the program's funds.

According to the non-partisan Medicare Payment Advisory Commission,
for every beneficiary who enrolls in a private plan today, the
government already pays 119 percent of what it would have paid for
that person's benefits in the traditional Medicare plan.

The compromise bill would jack that rate even higher, up to around 130
percent.

So if this reform becomes law, Medicare will actually wind up spending
more money on less efficient coverage.

Unfortunately, it may also have less money to spend, period, thanks to
a second major -- and less well-understood -- provision in the bill.

As things stand, Medicare gets part of its money from payroll taxes,
part from premiums, which beneficiaries pay, and part from general tax
revenues.

Under the compromise, if the actuaries who oversee the program
determine for two consecutive years that general revenues will be
covering more than 45 percent of the program's total costs, then
Congress will have to act to change the program -- either by cutting
benefits or raising payroll taxes. What's more, under the provisions
of this law, those changes will be filibuster-proof, requiring only 51
votes instead of the usual 60.

In theory, there's nothing wrong with mandating that the federal
government find a way to pay for entitlement programs like Medicare.

But if the idea here were really to limit the share of the federal
budget that goes to Medicare, then the plan could have called for
doing precisely that.

Instead, it merely calls for limiting the amount of program funding
that comes from income taxes, which are progressive, thereby shifting
the relative financial burden of the program from the wealthy to the
poor.

Needless to say, a program that relies on the poor to provide an
ever-larger portion of its financing is hardly one you'd consider
stable.

It's only when you consider the impact of these two efforts
simultaneously that the larger "reform" agenda starts to come into
focus.

First it makes a Medicare financial crisis more likely.

Then it demands that, in case of such a crisis, Congress either cut
benefits or raise payroll taxes -- either of which will hurt the poor
and middle class.

The more you think about it, the more this starts to seem a lot like
the Bush tax cuts:

Once again, Republicans and a handful of conservative Democrats have
come up with a plan that would shift taxpayer dollars from those who
need it to those who don't, making it more and more difficult to
sustain vital government programs.

But for all these flaws, at least seniors get a generous new drug
benefit out of the bargain, right?

Well, not exactly.

To be sure, the bill would make prescription drug coverage available
to every senior for the first time in American history -- an important
step.

Unfortunately, the people who need the help the most -- low-income
seniors facing daunting medical bills -- don't actually make out so
well under this scheme.

Many low-income seniors now rely on both Medicaid as well as Medicare,
with Medicaid covering the co-payments and deductibles they might not
otherwise be able to afford.

Unless the bill's language changes at the last minute, the new law
would prohibit Medicaid from plugging these gaps.

As a result, estimates the Center on Budget and Policy Priorities,
about 6 million elderly people -- all of them low-income, most of them
in nursing homes -- would end up paying more for drugs than they do
now.

All of which would, at the very least, seem to call for careful
consideration -- and maybe some more negotiation.

Instead, the Republican leadership is insisting on a quick vote before
Thanksgiving, this despite the fact that the bill's final language
hasn't even been written -- and that the Congressional Budget Office
hasn't even calculated its cost.

Promoters of the compromise say an early vote would keep the debate
from becoming too partisan.

More likely, it would keep critics from letting Americans know what's
really in the bill -- and killing a bad idea before it's too late.
_____________________________________________________

I'm sure you're all pleased about that, aren't you? You're not?
What're you guys a buncha socialists or sumthin'?

Harry