- The Washington Times - Saturday, July 5, 2003

White House advisers say legislation to open up Medicare to more competition for prescription drug coverage and other health-care benefits is the first step in a long-term effort to shift the elderly out of the government program and into private plans.

House and Senate bills that would offer the elderly a choice between Medicare and privately run plans have come under attack from conservative think tanks who say the bills’ reforms do not go far enough to provide stronger incentives that would encourage private health-care networks to compete with the government. But the administration and its allies say that the pending reforms will be the foot in the door that will lead to further reforms in the years to come.

“Putting this forward will create a dynamic for more competition,” a White House adviser said of the reform bills passed in Congress and that are now headed to conference to work out differences between them.

The adviser said that once these first reforms are implemented, the White House will support changes to open up Medicare to wider competition.



The adviser said, on condition of anonymity, that President Bush wants to “move away from defined benefit plans” to a system in which the elderly can shop for less expensive prescription drug coverage and other full-service health-care plans as federal employees do now under the Federal Employee Health Benefits Plan. The federal employee plan has effectively held down costs over the years.

Nevertheless, the bills have been battered by both the left and the right since their passage last month.

Conservative think tanks, such as the Heritage Foundation, have denounced the plans for being too timid in their reforms. Prescription drug coverage competition will not fully gear up until 2006, and under the House measure broader Medicare competition styled along the lines of the Federal Employee Health Benefits Plan will not kick in until 2010.

Liberal Democrats have attacked the plans and the administration’s motives, saying that they are intended to dismantle Medicare as it exists today.

“We’ve got a handful of radical people that are really trying to destroy everything that our parents have built on for us to be the beneficiaries. They’re trying to destroy Social Security. They’re trying to destroy Medicaid. And today they’re trying to serve laced Kool Aid to the American people to kill Medicare,” said Rep. Charles B. Rangel of New York, the House Ways and Means Committee’s ranking Democrat.

Actually, administration officials say the White House’s strategy for phased-in Medicare reform is very similar to its incremental strategy for long-term Social Security reform to let workers put 1 percent or 2 percent of their payroll taxes into stocks and bonds. The White House would be happy to pass even a very modest individual retirement plan bill, believing that it would become more popular over time and lead to wider privatization of the government retirement system.

In the same way, say White House officials, even modest competition among private health- care plans “will create a dynamic” for more choices.

Administration allies who support the initial reforms that are moving through Congress say they like the White House’s incremental approach to Medicare changes.

“It’s a huge step forward politically to introduce medical care competition and choice. Some of these conservative think tanks want the whole enchilada,” said Bruce Josten, the U.S. Chamber of Commerce’s chief lobbyist who often advises the White House on domestic policies.

“In the beginning of the process to reform Medicare, you have to establish a beachhead and you do that by establishing a drug benefit” to help seniors with high prescription bills, Mr. Josten said.

“You have to begin somewhere by giving beneficiaries the power to choose. If they act as consumers, given a choice between open-ended entitlement and a private plan, that should slow the growth in spending for senior citizens,” he said.

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