- The Washington Times - Thursday, November 20, 2003

President Bush and congressional Republican leaders say the Medicare prescription-drug legislation will preserve the long-term viability of the federal program, but lawmakers and analysts on both sides of the political spectrum say the bill falls short.

At root, the question is how well the cost-saving measures Republicans are touting will work. Those backing the legislation say the bill marks an historic change in Medicare, which already has a $13.3 trillion unfunded liability over the next 75 years.

“I am confident that we are on the right track, and that successful examination of this test will perhaps lead to others, so that we can reverse the insolvency,” said Rep. Bill Thomas, California Republican and chairman of the House Ways and Means Committee as a House-Senate committee met to approve the final language. Both chambers will vote on it in the next few days.

The bill requires government budget analysts to provide better figures on Medicare’s liability and makes it easier for Congress to pass a bill if 45 percent of Medicare costs come from general revenue, rather than from the dedicated payroll tax.

It includes a demonstration project for six metropolitan areas in 2010 that would force Medicare to compete directly with private insurance plans. That means if it cost Medicare more to deliver coverage than a private plan, consumers who stay in Medicare would have to pay the difference.

Conservatives had hoped for a permanent program beginning in 2010, but settled for a demonstration project as a down payment.

But outside groups evaluating the bill said the demonstration falls short by being so limited.

“We have a national insurance market. It’ll be a miracle if they can get any insurance companies to offer anything in such a restricted area,” said Don Devine, who is heading a coalition of conservative-leaning groups that has lobbied for a Medicare bill. “A demonstration grant is not fundamental reform.”

Robert E. Moffitt, director of the Center for Health Policy Studies at the Heritage Foundation, said history shows demonstration projects usually are destined to fail.

The foundation released a study this week laying out failures from a medical savings account demonstration in 1996 and Medicare-plus-choice in 1997, which was heralded as a key component of the balanced-budget agreement that year.

Heritage also predicts the drug benefit will add $2 trillion to Medicare’s unfunded liability between now and 2030.

Republican leaders have defended the bill as the best they could get, but also said they believe it will be enough to bend the cost curve downward.

“As a conservative, this is a piece of legislation that complies with my principles as a conservative,” said House Majority Leader Tom DeLay, Texas Republican.

The White House also defended the bill’s effects.

“This bill provides the path towards putting in place a structure that over the long term will be able to address the real fiscal danger in Medicare by having real competition, by having more market forces, and by giving seniors choices,” spokesman Trent Duffy said.

What the dispute comes down to, according to Robert Bixby, executive director of the deficit-hawk Concord Coalition, is whether the demonstration project will work or not.

“Both sides are sort of gambling. One is gambling this demonstration is going to blossom into a fundamentally changed Medicare program. And the AARP is gambling they can take this program and it’ll blossom into a bigger program,” Mr. Bixby said. “Based on what I’ve seen with this bill, I’d put my money on AARP winning that gamble.”

For their part, Democrats opposing the bill fear the demonstration project will do too much.

“It’s effectively what the insurance companies do best, and that is cherry-pick … and leave those that are sicker and older in the Medicare system where the premiums will rise,” said Sen. Edward M. Kennedy, Massachusetts Democrat.

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