Conservative controls on Medicare costs

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For diehard advocates of reducing the role of government in health care, the current Medicare proposal hardly looked like a victory. It adds hundreds of billions of dollars in new spending for a drug benefit that not everyone needs but every taxpayer would pay for. It has a government fallback provider of drug benefits that would dictate drug prices and prescribing practices. Payments for private health plans would be the cost of the 'same' services at administered Medicare price, plus a small increase. And Democrats add dumb amendments forcing drug companies to sell all their drugs at Canadian prices daily.

But as debate over the details of the proposal continues, the light is beginning to shine on the growing gap between what Medicare now offers and the need to give seniors greater control and choice over health care spending in the future. And Congress is beginning to realize that simply pouring money into the same old Medicare is not only bad policy, it's bad politics, too.

A recent Zogby survey put out by the Galen Institute on what the public thinks about Medicare reform should be a useful guide to improving the current legislation even more, as well as what to leave alone. The survey reveals that 82 percent of all Americans and 67 percent of seniors believe that "seniors should have the option of picking a private health plan approved by the Medicare program to provide their health benefits." That is, as long as Medicare puts its seal of approval on a plan, people are enthusiastic about the private plan participation. Seventy-eight percent said that "health plans should be able to negotiate with government to get a fair price," while 14 percent said "the government should decide how much to pay plans." Ditto for the government getting into the business of setting drug prices. Indeed, even a Kaiser Family Foundation survey found that people opposed pharmaceutical price controls of any sort if they lead to a decline in future research.

Conservatives should reflect upon the history of health care reform and learn from its masters. The last time Republicans tried to increase medical choices; it was by introducing medical savings accounts. Back then Sen. Edward Kennedy sought to limit the availability of MSAs and make them difficult to use. He is using the same tactics to limit consumer choice in Medicare. Mr. Kennedy wants to use the Medicare proposal as a downpayment on more spending and a bigger drug benefit. Conservatives should learn from Mr. Kennedy and use the plan to make a downpayment towards ensuring that this generation of seniors and the next can choose to keep the coverage they now have through retirement. They should begin to offer amendments to make Medicare more responsive to the medical needs of seniors.

For example, the Senate is now considering an amendment that would encourage employers to keep paying for their retirees coverage and increase payments to health plans. That would also keep more of the cost of prescription drugs in the private sector. Since the Congressional Budget Office reports that 37 percent of companies would drop drug plans for their retirees in favor of a taxpayer supported program, conservatives should insist that these dollars be used as a complement to, not as a replacement, for private-sector coverage. Seniors should be able to purchase a catastrophic-only policy that wraps around private sector converge if they choose.

Second, a number of amendments should be introduced to allow seniors access to the best medicine wherever it is. The administered price of Medicare services hides a certain form of rationing required to control costs. To save money, the current Medicare program will cover the cost of the new life saving defibrillator for one-third of the people that could possible benefit from its use. It delays access to new drugs for cancer and multiple sclerosis for years after they are introduced, as it determines whether to pay for the medicines and how much. It has yet to provide people with the most serious illnesses more coordinated care and an accelerated path to the best new medicines in the pipeline. Fewer doctors than ever are participating in Medicare because of the cost and hassle.

Yet many private plans, including those offered to federal workers, cover these range of new services. Today, seniors don't have the freedom to join health plans that are already providing such benefits or include doctors they have known for years but have left Medicare. Why should they be penalized for doing so because the increasingly outdated Medicare is the price benchmark? And why should they be limited to a choice of three plans if there are more and even better ones for them? To remedy this problem, someone should sponsor a "Leave No Senior Behind Amendment" that would allow any senior to choose any plan approved by Medicare.

Rather than see this bill as the beginning of the end of Medicare, conservatives should realize that this is the end of the beginning of changing the health care system. It took decades -- and increased spending -- to introduce choice into education and pass welfare reform. That goes for changing Medicare.

Robert Goldberg is director of the Manhattan Institute's Center for Medical Progress.