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GOP rolls the dice on Medicare bill

The Senate’s approval of the Medicare prescription drug bill means Tuesday, Nov. 25, 2003, may go down in history as one of the most important dates in modern American politics.
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The Senate’s approval of the Medicare prescription drug bill means Tuesday, Nov. 25, 2003, may go down in history as one of the most important dates in modern American politics. The new law could help the Republican Party capture the Medicare issue from the Democrats or, if the new $400 billion entitlement for senior citizens works badly, it could alienate older voters from the GOP. Either way, the bill will likely have a significant effect on next year’s elections.

On a 54-44 vote, the Senate sent the bill to President Bush, whose approval will launch the most massive new entitlement program since a Democratic-controlled Congress created Medicare in 1965.

If you are a Republican who takes the pessimistic view, you might say President Bush risks losing the support of grass-roots conservatives who fear profligate federal spending.

A pessimist would say Bush and his party will not gain those Democrats and independents who suspect the worst motives on the part of the Republicans in creating this new entitlement.

“I want a real drug benefit with real steps to bring drug costs down, not one that pads the pockets of CEOs at drug companies and HMOs,” Democratic presidential contender Sen. John Edwards said Sunday. “We are never going to get health-care costs under control in this country until we stand up to these people, stand up to the drug companies, stand up to the HMOs.”

Edwards and other Democrats who oppose the legislation also contend that it:

Prohibits Medicare from using its buying power to bring down drug prices.

Continues to make it impossible for Americans to buy cheaper drugs in Canada or other countries where medicine costs less due to price controls.

Does not take steps to curb misleading and costly advertising by pharmaceutical companies.

Will ultimately lead to Medicare’s demise by setting up pilot programs that will allow private-sector insurance firms to compete with the government-run program in providing services to older Americans.

“It’s not gold. It’s something we call fool’s gold,” said Sen. Harry Reid, D-Nev., one of the bill’s opponents, arguing that the legislation would lead to erosion of Medicare benefits in the long run.

The bill could also be a form of political “fool’s gold” for Bush, a bill that gains him little or even hurts him in the 2004 elections.

Bush's motivation
Given all that, why have Bush and Senate Majority Leader Bill Frist made this new entitlement for older people a top priority?

One obvious answer: According to the Census Bureau, the peak age group for voting participation is 65 to 74 years. An estimated 72 percent of people in that age group voted in the 2000 election.

The bill will provide substantial new taxpayer-paid benefits to older people — the very people who are most likely to vote next year.

Older voters will see immediate benefits: Starting in April, all Medicare beneficiaries would get a discount card for buying prescription drugs. Retirees would see an immediate 15 percent to 25 percent cut in their prescription drug outlays.

The full entitlement plan would take effect in 2006.

What has generally been overlooked in the commentary on the bill is that it stands usual Republican income-related politics on its head: it treats best those parts of the elderly population who are poor, while it imposes new burdens on upper-income retirees by requiring them to pay more for their Medicare Part B coverage, which pays for visits to doctors’ offices and other non-hospital services.

For the first time ever, the measure incorporates the principle that those who are wealthier should pay more for their Medicare benefits, a principle known in Washington lingo as “income relating” or “means testing.”

If this principle were enacted and extended, the government might be able to get a grip on the enormous Social Security and Medicare costs that are bearing down on taxpayers in the next decades.

Individuals with incomes below $13,055 and couples with incomes below $17,619 and with assets no greater than $6,000 per individual and $9,000 per couple would pay no deductible and no monthly premium for their new drug benefit.

Retirees with incomes above $80,000 for a single person and $100,000 for a couple would be required to pay more for their Part B benefits.

Millionaires pay more
“Why should hard-working taxpayers pay for a millionaire’s health care? That is my view,” said Sen. Dianne Feinstein, D-Calif., Sunday as she argued on the Senate floor for the bill’s passage. “I don’t see income relating as bringing about the downfall of Medicare. I see it as making the program more solvent.”

She also said, “I find the low-income benefits of this bill to be one of its biggest strengths.”

She said that in California the low-income benefits in the bill affect about 1.4 million people who have limited savings.

“Some of these are low-income seniors who do not qualify for Medicaid,” she said. “Because of $3,000 in savings, they are ineligible to receive prescription drug coverage through the California Medicaid Program. They will now have prescription drug coverage which is much better than I had hoped.”

In Florida — the state with the highest percentage of voters over age 65 — the bill’s effect will be especially intriguing to watch next year. “On balance, passage of the bill benefits Republicans,” said Jim Kane, chief pollster of the Florida Voter, a non-partisan polling organization. “Republicans had to have this bill going into the election.”

He added, “if the Democrats are successful at defining this bill as the death knell for Medicare, Republicans will suffer. But so far they have not been able to make the case that this is a poison pill that will destroy Medicare. It may be too complicated for a sound bite.”