Shell Game

Seniors need a prescription drug benefit, but they need a functioning Medicare system a whole lot more.

That should have been the guiding rationale when Congress set about crafting drug legislation, but thanks to the political miscalculation of AARP and a handful of Democrats, seniors instead will get a nominal prescription drug plan that's part of a larger legislative push to open Medicare to wholesale privatization.

The crux of the legislation is this trade-off: Seniors get $40 billion a year total in new drug benefits, but will be made subject to means testing and higher premiums. In addition -- and perhaps more importantly -- the legislation allows for experimental programs in six metropolitan regions in which private insurers or HMOs would offer services, luring seniors away from the traditional Medicare program.

The drug plan is rather complicated. According to an explainer that ran in the Washington Post in November, seniors would pay about $420 a year for drug coverage. Once they met the plan's $250 deductible, the legislation would pay 75% of drug costs up to $2,250. After that magic number, seniors would have to pay 100% of the next $1,350 out of their own pockets, before insurance started picking up the majority of the bill.

That's a big nut for seniors to have to carry -- and it comes with a very heavy cost to taxpayers in the form of drug company subsidies and slow death of the traditional Medicare system.

The plan also calls for private firms to administer the drug benefit on a regional basis, with about $12 billion in subsidies going to private insurers that offer basic health insurance, including preferred provider organizations that rely on a network of doctors but allow patients to go outside network if they pay extra and more traditional fee-for-service plans.

More dangerous, however, is the introduction of competition into Medicare, tied to the prescription drug benefit. The idea, as the Boston Globe pointed out in an editorial, would be to "use the drug benefit to prod older Americans into private health plans for all their benefits."

Under the legislation, seniors in six metropolitan areas would be made guinea pigs for privatization beginning in 2010. The plan would subsidize private insurers -- about $12 million in seed money has been set aside in addition to an increase in reimbursements to the companies to encourage them to offer insurance to seniors in those areas. If the private plans could provide cheaper services, premiums for those in the traditional Medicare program would go up.

"Higher premiums," the Globe says, "could encourage the healthiest elderly to desert regular Medicare for the health plans, leaving the sickest people behind to pay ever higher amounts for medical care."

And as the cost of the government program were to rise, support for it would erode, leading ultimately to its demise.

Robert Kuttner, co-editor of The American Prospect and a columnist with the Globe, said the Bush "administration's real goal is to shift Medicare from a public program to a private one, with the government's contribution capped. For the right, it's a threefer: contain government's costs, shift risks to consumers, and let private industry cash in."

At the same time, he points out, "the Medicare legislation is sheer genius" when "viewed as a bill for special interests."

"Pharmaceutical companies get to sell more drugs at prices they set. Hospitals and doctors receive additional payments. Insurers get to run a lucrative new program with government subsidies. And corporations that are paying health benefits to retirees get new tax breaks worth $18 billion."

E.J. Dionne Jr. in his Washington Post column rightly described the Medicare bill as Bush's attempt to carve up the senior vote. But all it has done is anger seniors.

The Post reported in late November, shortly after AARP began running a multimillion dollar ad campaign supporting the drug bill that an AFL-CIO poll showed that "only 18% of AARP members agreed with the organization's endorsement."

The paper also reported that "about two dozen disgruntled AARP members from Maryland, New York and Pennsylvania gathered in the rain outside the organization's downtown Washington headquarters to cut up their membership cards." Other protests occurred in Boston, Miami and around the country.

The bill "destroys one of the most successful programs in the history of this country," Isaac Ben Ezra, president of the Massachusetts Senior Action Council, told the Associated Press as he led a demonstration of about 40 people in Boston. "Shame, AARP."

Shame, Congressional Republicans. Shame, President Bush.

Organizations working to overturn the legislation include:

The Alliance for Retired Americans, 888 16th St. NW, Suite 520, Washington, D.C. 20006; phone, 888-373-6497; website,

AFL-CIO, 815 16th St. NW, Washington, DC 20006; phone, 202-637-5000; website,

Campaign for America's Future, 1025 Connecticut Ave. NW, Suite 205, Washington, DC 20036; phone, 202-955-5665; website

Hank Kalet is a New Jersey writer. Email

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