- The Washington Times - Saturday, March 20, 2004

Whether the new Medicare prescription drug law costs $400 billion over 10 years or $534 billion, the Democrats, outraged over reports the Bush administration muzzled its own higher estimates of the cost, should be mindful of a key constituency group as this issue plays out.

Democrats have called for federal investigations into whether Richard Foster, chief actuary for the Centers for Medicare and Medicaid Services, was ordered by his boss Tom Scully to withhold Medicare bill cost estimates about $100 billion higher than those of the Congressional Budget Office.

From an ethical — Democrats are quick to use the word “criminal” — standpoint, the Bush administration may have made a huge error if, indeed, Mr. Scully threatened Mr. Foster in any way to keep him from releasing his numbers. The administration has denied any such thing happened.

True, the Democrats can gain some political mileage from this as the presidential campaign heats up. But their calls to reopen or revote the Medicare bill, that provides long-awaited prescription drug coverage for seniors, are ill-advised.

The new drug program does not engage fully until 2006, but the discount drug cards that bridge the gap until then are almost ready for rollout. Card vendors will be announced in a few weeks and sign-ups begin in May.

Those cards, when wrapped up with state and pharmaceutical company discount programs, could greatly reduce drug costs for low-income seniors. Some estimates see a savings far greater than the CMS’ 15 percent to 25 percent projection.

Whether or not they like the whole Medicare package, Democrats should think long and hard about the consequences before doing anything to jeopardize or delay the discount cards. Seniors are reliable voters and if upset because Democrats waylay this assistance could create problems for the party’s apparent nominee, Sen. John Kerry of Massachusetts.

There is plenty of time for Congress, in its normal course of legislative action, to review provisions of the Medicare law that begin in 2006 and beyond and make appropriate changes that affect the cost estimates.

It certainly is no surprise, however, that the policy was manipulated by politics — on both sides. The Bush administration walked — and may have crossed — a fine ethical line deciding how much information lawmakers should have in their debate on the bill last fall. Back then, several attempts to pass Medicare prescription drug legislation had failed, but lawmakers arguably had a right to see a full range of estimates.

The administration did not want the Foster estimate in full play because enough conservative Republicans already were upset with the CBO’s price tag. They knew an even higher figure could have meant this bill’s defeat.

The Democrats, for their part, manipulated policy after the law was passed for political effect. They made more of the numbers than reasonably should have been expected.

Both Medicare cost estimates — CBO’s and CMS’ — are no more than good guesses. But in a law that will span a decade and has many variables that cannot be plugged in until its final years, more than guesses cannot be expected.

Along with providing drug coverage, the law creates new managed-care options for seniors and serves up billions of dollars in incentives and perks for health plans to create preferred provider organization networks (PPOs) as an adjunct to the traditional, fee-for-service Medicare.

The $400 billion CBO estimate was based on a far more conservative prediction, compared to the Bush administration’s numbers, of how many seniors would choose PPOs over traditional Medicare. The CBO estimated that, at best, only about 10 percent or so would participate, based on the less-than-stellar success of Medicare+Choice, the Medicare managed-care option that has struggled to keep even 12 percent of seniors in HMO plans.

Early on, the administration estimated, publicly and repeatedly, 33 percent participation. And even though CMS did not issue a formal budget prediction — and both parties now are squabbling over who asked for what data from the administration — it still is reasonable to believe Republicans and Democrats knew well before the conference committee reported out a final bill that different projections would mean different cost calculations.

PPOs are not called “managed-care lite” for nothing. They do not employ the cost-saving mechanisms for health plans that HMOs use — such as restricting access to providers and services. Therefore, they are more expensive to operate — possibly up to one-third more.

Also, there are differences in how the CMS and CBO estimate participation in the 2006 drug benefit. CBO predicts fewer seniors will enroll and, hence, the program will cost less. All this, along with smaller quibbles over other numbers, make up the bulk of the variation in cost estimates. So we will not know, until the program actually gets under way, what will happen.

On the one hand, beneficiaries already participating in Medicare have indicated strong support for the fee-for-service program and may not want to switch. Traditional Medicare functions closer to the health insurance they had when they were working. Also, only about one-third of Medicare beneficiaries do not have some type of drug coverage now.

On the other hand, Baby Boomers who begin retiring in the next decade might go for the PPOs — which now cover more than half of the under-65 commercial insurance market.

The reality of the present, however — low-income seniors who must choose between food and medicine and need help right away — should trump politics for Democrats. Whatever the political consequences, whatever changes are made in the law down the road, low-income seniors should not be victims of health-care policy used as a political weapon.

Ellen Beck is the health-care policy correspondent for United Press International.

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