Politics & Policy

Medicare Blues

A problem for the president.

What happens when a popular president wants to reform a popular public program without spending much political capital? If Bush is the president and Medicare is the program, apparently not much. And unless the White House changes strategy, Medicare reform is set to become the biggest domestic defeat for the administration.

During his State of the Union address, President Bush outlined sweeping changes to Medicare. In obvious reference to the coverage enjoyed by federal workers, Mr. Bush stated: “And just like you — the members of Congress, and your staffs, and other federal employees — all seniors should have the choice of a health care plan that provides prescription drugs.” It’s been less than a month since the State of the Union address — and momentum for Medicare reform is all but dead. This is unfortunate because President Bush is right.

Consider: The program will consume a quarter of federal revenues in just 30 years. Medicare is pricey — and it falls short. According to calculation by AMA chief economist Jesse Hixson, Medicare could leave a senior with a medical bill exceeding $35,000. No wonder. Medicare doesn’t cover prescription drugs in an era of pharmaceuticals, nor does it pay for some preventative screening and long-term care in a time of chronic illness. Medicare’s coverage is so lacking that many seniors buy separate insurance just to fill in the holes.

President Bush’s idea of introducing competing plans — modeled after the successful Federal Employees Health Benefits Plan — potentially addresses both deficiencies. It would allow cost savings through better management; it would empower seniors to choose more comprehensive coverage.

And yet, President Bush has not moved the debate forward. At a Washington conference on Medicare reform hosted by the Manhattan Institute in early February, a panelist asked the audience of journalists, health experts, and congressional staff if a prescription-drug benefit in any form was likely to pass this year. Fewer than half thought it would. And a prescription-drug benefit is not the core objective. For the Bush administration, adding the coverage is supposed to be the sweet coating for the bitter pill of overall Medicare reform.

If insiders aren’t convinced the president can push something through, the public remains unswayed that he should. In January, a Wall Street Journal poll found that a majority of Americans (59 percent) thought Medicare could add drug coverage without an overhaul of the entire program. More recent polling shows that the public mood hasn’t changed.

The White House hasn’t helped the effort. Since the State of the Union, President Bush has delivered exactly one speech on “Strengthening Medicare,” at which he spoke for a few minutes about health reform in a 40-minute address. (Most of the speech focused on Iraq and tax cuts.) Since then, the administration has done little. Reform details are unclear and unfocused.

A case needs to be built and urgently.

For the better part of two years, the president has spoken softly of “modernizing” Medicare and allowing “choice.” Couple this with the strong rhetoric of even the most conservative Republicans on the need for pharmaceutical coverage and the result is less than surprising. It’s like the old “Far Side” cartoon depicting a dog owner speaking to his pet. In the first panel, the owner explains to his dog what they need to do. In the second panel, we see the dog’s perspective — “blah blah blah Fido blah blah blah Fido…” Americans have listened to Republicans and understood only “prescription drug benefit” in all the platitudes.

There are two temptations for the White House. The first is to forget about reform and simply add a prescription-drug benefit. Democrats want a gold-plated plan; at least the White House could add to Medicare on its own terms. The second would be to allow seniors to get prescription drugs if they sign on to a managed care plan.

The White House must avoid both temptations. Having staked out the most sweeping position on Medicare reform by any presidency in a generation, the White House may end causing more harm than good. Partial privatization — while leaving Medicare’s structure unchanged — won’t work. Adding a benefit will hasten Medicare’s fiscal demise. Indeed, both ideas would eventually play into the hands of those who still fantasize about a Canadian-style single-payer system.

“Medicare is the binding commitment of a caring society,” President Bush stated during the State of the Union. But to move the debate forward, the President must move beyond such platitudes.

President Bush needs to explain to Americans that nostalgia isn’t enough. He can start by pointing out Medicare’s deficiencies. He can continue by prescribing a system based on individual choice and competition. And he can respond to his critics by observing that doing otherwise would be the political equivalent of malpractice.

David Gratzer is a senior fellow at the Manhattan Institute.


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