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Capitol Comment

    Capitol Comment 256 - Schizophrenic Health Care Reformers

    10/27/1999

    The House of Representatives passed tax breaks to make health insurance more affordable on October 7 – then followed up with a law to make it more expensive on October 8. This isn’t the only instance where politicians are ‘reforming’ at cross-purposes. Consider their schizophrenic stands on managed care and Medicare reform.

    Causing people to lose their insurance contradicts the whole notion of patients' rights.

    While the Clinton administration has been at the forefront in bashing HMOs, its Medicare reform plan would actually extend their restrictive practices to Medicare. Health Maintenance Organizations (HMOs) have received bad publicity for restricting patients’ access to specialists. A related criticism is that HMOs, through the way they pay physicians, provide doctors with incentives to choose cheaper treatments for their patients.

    The president wants to give Medicare bureaucrats the power to select ‘primary care physicians’ for seniors. Medicare would give seniors incentives to choose these doctors. In exchange, participating seniors would forego their right to see other doctors without a referral from their primary care physician. The plan would also create a pilot project for physicians’ group practices: if doctors keep spending on Medicare patients below a government-set dollar limit, they would receive a bonus payment from Medicare?yet this kind of rationing is taboo for private insurers.

    Politicians can’t decide whether they want to make health insurance cheaper or costlier. Both houses of Congress have passed a "patients’ bill of rights." Each bill contains regulations that will force health plans to hire additional administrative, legal, and medical personnel – and force patients to pay the extra costs. But Congress also took steps to make insurance more affordable: new and expanded tax deductions for health expenses for the uninsured, self-employed, and Americans who work at small businesses, and expanded eligibility for tax-free Medical Savings Accounts. For his part, Vice President Gore also proposed new tax credits for individuals and small businesses, but only two weeks later called on Congress to pass the patients’ bill of rights (with its attendant premium increases).

    More lawsuits means more uninsured. Even worse, the House version of the patients’ bill of rights allows more lawsuits and punitive damages for medical malpractice against health plans and employers. The costs of judgments, settlements, and lawyers’ fees would be passed on to other workers in these health plans, raising everyone’s premiums further. Moreover, the risk of litigation will force many businesses to drop their employees’ health insurance altogether. Causing people to lose their insurance contradicts the whole notion of patients’ rights.

    Of course, although this legislation would allow patients to sue private health plans for denying coverage for a particular treatment or refusing to refer them to a specialist, it wouldn’t allow them to sue Medicare for doing the same things – because that would cost the government billions of dollars.

    Expanding government health care and weakening private health insurance. The president’s Medicare reform proposal would also provide seniors with limited coverage for outpatient prescription medicines. In a report released to support the proposal, the White House noted that "only one-fourth of Medicare beneficiaries [12 million] have retiree drug coverage, which is the only meaningful form of private coverage."1 But by creating a huge government program to buy medicine for seniors, President Clinton would actually give employers an incentive to drop this coverage for their retirees. The Congressional Budget Office (CBO) projects that 3 million seniors would lose this coverage; PricewaterhouseCoopers estimates 6 to 9 million seniors would lose coverage.2 Instead of improving upon "the only meaningful form of private coverage," the president’s ‘reforms’ would gut it.

    Throwing stones from glass (White) houses. Over six million Medicare beneficiaries already receive their health care through managed care organizations that participate in the Medicare+Choice program. They frequently obtain extra benefits, such as coverage for prescriptions or dental care, from these HMOs for no or small additional premiums. In September, a government report indicated that many plans will raise premiums and co-payments and that some would lower the cap on the pharmacy benefit, due to lack of adequate compensation from Health Care Financing Administration.

    Vice President Gore quickly blasted these Medicare HMOs, claiming that "too many of America’s working families depending on Medicare cannot depend on their HMOs to deliver the affordable, critical benefits that convinced them to choose HMOs in the first place."3 But in his next hypocritical breath, he called on Congress to enact the president’s Medicare reform plan, which too would raise premiums and co-payments in exchange for capped pharmacy benefits.

    Why does Congress make insurance more affordable with one hand and take it away with the other? Why do Clinton and Gore demand managed care reform and recommend converting Medicare into a costly, tyrannical HMO? Maybe the explanation is that politicians will do whatever pollsters say is popular, even if it contradicts what they did the previous day. Perhaps they want more power over your health care, regardless of whether you have private insurance or are in a government program. Real reform, however, is not making consumers’ choices for them, but expanding their options.

    1National Economic Council and Domestic Policy Council (the White House), "Disturbing Truths and Dangerous Trends: The Facts About Medicare Beneficiaries and Prescription Drug Coverage," July 22, 1999, p. i.

    2Testimony of Dan L. Crippen, Director, Congressional Budget Office, before the U.S. Senate Committee on Finance, July 22, 1999; PricewaterhouseCoopers, "President Clinton’s Medicare Prescription Drug Benefit: An Analysis of Displacement of Employer-Sponsored Retiree Prescription Drug Coverage," September 21, 1999, p. 1.

    3Office of the Vice President, "Medicare Families in HMOs Are at Risk of Losing Benefits," September 22, 1999.