The Medicare legislation being voted on by Congress this week hopes to bring the greatest change to Medicare in its 40 year history. The plan is sure to effect our health, our pocket books, and the future of our health care industry in America.
The bill is not just about giving a prescription plan to seniors which everyone agrees is a necessary addition to Medicare. The question is about – “how should 400 billion dollar over 10 years be allocated?”
If passed the present bill will fundamentally change the structure and direction of Medicare in two significant ways. First it will allow private firms to administer the drug benefit program on regional basis. Second, it will pilot test the complete privatization of Medicare.
Who administers the drug benefit program is a critical question. If the government administers the program, it is one 900 pound gorilla which can wrestle with drug companies to provide competitive prices. If it is a large number of private firms who have to deal with the pharmaceutical companies individually, then there is little leveraging in negotiating prices.
The power of leveraging is well know in Canada. A month’s supply of the drug for diabetes, glucophage, costs 64 dollars in US while it only costs 14 dollars in Canada. Why? Because Canadian Health System as a single purchaser can force the drug companies to lower their prices. The present bill handcuffs Medicare to pay any price the drug companies wish, hence boosting their profits at the expense of Medicare.
The “fleecing of America” by pharmaceutical companies is a real concern. Opponents point to the 20 billion dollars profits by the pharmaceutical industry which is six times that of the automotive industry.
The present Medicare bill flirts with the idea of privatization of Medicare. This is the second major fundamental change in Medicare. Over time Medicare which is fee for service would become a health maintenance organization, HMO, where beneficiaries would be restricted to physicians and hospitals which are in a certain plan. Just as Medicaid in Tennessee, TennCare, is being administered by HMOs, Medicare would be administered by private insurers. The experience of such programs has not been very positive and many people believe it is heading us in the wrong direction.
Other provisions in the bill offer to raise payment to doctors, add coverage for diabetes, heart disease and mammography and halt cuts to hospitals if they offer quality data.
What seniors need to decide and have their representatives understand is – which direction do they wish to see Medicare go? Do seniors wish the administration of Medicare by HMOs and the drug program by private firms or hope for a new bill?
The vote on the Medicare bill may be much like the 2000 election – very close, very controversial, and victory for … well we will have to see.