Hidden behind proposed drug benefit
November 21, 2003 | Page 7
CONGRESS IS getting set to pass Medicare "reform." So hang on to your wallet. Negotiators in Congress are finalizing legislation to expand Medicare to cover prescription drug costs. But behind this popular measure, there are a ton of catches. All told, the politicians' so-called reforms will harm the very people that Medicare is supposed to help. ERIC RUDER looks at Congress' Medicare "deform"--and explains why it's part of the overall crisis of the U.S. health care system.
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FOR THE 40 million elderly and disabled currently on Medicare, Congress' debate about Medicare "reform" is a cruel joke. The much-hyped promise of prescription drug coverage has raised the hopes of millions of seniors that the politicians might provide some much-needed relief.
Because of the high price of prescription drugs, Medicare recipients too often face a monthly dilemma about whether to buy their medication or their groceries, or pay other bills. Yet as negotiations continue over the final form of Medicare legislation, it's becoming clear that the politicians want to cover prescription drugs in exchange for reducing benefits overall.
For example, legislators may decide to impose a $40 to $45 co-payment for every two months of home health care--a benefit that Medicare currently covers without cost to recipients. If this amount doesn't seem like much, establishing the principle of co-pays will open the door to bigger hikes in the future. But for seniors on fixed incomes, even small increases can plunge them into a spiral of financial distress.
What's more, the plan for prescription drug coverage comes with a nasty downside for seniors who buy health insurance through their former employers. Employers can use government coverage of prescriptions as an excuse to disqualify retirees from their health plans.
The real beneficiaries of Medicare drug coverage will be drug companies. That's because 61 percent of the new Medicare dollars to be spent on prescriptions would end up as profits, free and clear, for the drug makers, according to Alan Sager and Deborah Socolar, directors of the Health Reform Program at the Boston University School of Public Health.
The drug companies claim that they charge high prices sot that they can spend more money on research and development. But the truth is that pharmaceutical corporations devote more of their revenues to profits and advertising. In 2001, 18 percent of drug company revenues went to profits and 27 percent to marketing and administration--compared with 11 percent spent on research and development.
The politicians have hidden the real double-cross in the new Medicare bill with misleading assertions about the benefits of "competition." The House version of the legislation, which is favored by conservative Republicans, contains a provision that would give recipients a lump sum to purchase private insurance, with the option to pay more for traditional Medicare coverage.
The idea is that promoting competition between the government-run Medicare system and for-profit health care corporations would increase efficiency, offer seniors more choices and control costs. But on all three counts, past experience shows that this is a delusion.
Medicare HMOs already provide coverage to millions of seniors and people with disabilities. These HMOs spend a much higher proportion of revenues on administration costs--an average of 15 percent, compared to 2 percent under government-run Medicare. They also give recipients less, not more, choice--limiting their alternatives in terms of doctors, facilities and even what medical procedures are covered.
The most deceptive claim of all is that competition with private insurance would "contain costs." Again, the experience of Medicare HMOs is instructive. In 2001, someone in good health enrolled in a Medicare HMO spent a hefty $1,786 in out-of-pocket expenses. For those in poor health, the out-of-pocket cost was a staggering $4,783.
Congress is making the Medicare crisis worse by introducing more of what has caused the overall health care crisis--the profit motive. The politicians do this to please the lobbyists and donors who bankroll their campaigns--the same motive behind their other decisions on health care.
Thus, for example, in order to win the favor of its donors in the health care industry, the Bush administration has refused even to consider legislation that would limit work hours for nurses. As a consequence, hospitals and nursing homes regularly force nurses to work more than 12 hours at a time--despite the fact that long hours "cause fatigue, reduce productivity and increase the risk that nurses will make mistakes that harm patients," according to a new report by the National Academy of Sciences.
The press has portrayed the debate over Medicare as Democrats standing up to Republican schemes to privatize the system. The truth is that the Democrats already agreed to many of the principles of higher co-pays and a role for private insurers when they voted for Medicare "reform" in June.
"The way out of the crisis and past these smoke-and-mirror 'reform' proposals is recognition that the private insurers are superfluous," wrote Kay McVay, president of the California Nurses Association, earlier this year. "Most of the industrialized world and much of the not-so-industrialized world, has been able to do without them for quite a while. They have also been able to impose and enforce controls on health care cost inflation. Of course, this has meant no profits to be reaped in a health care 'market.'"
The crook in charge at HealthSouth
FORMER HEALTHSOUTH CEO Richard Scrushy was used to living the good life. But in early November, the Justice Department issued an 85-count indictment against Scrushy for a multibillion-dollar scheme to defraud investors of HealthSouth, a vast international health care conglomerate.
If convicted on all counts, Scrushy faces $36 million in fines and a 650-year prison term. Actually, Scrushy could afford the fines.
But prison might come as a shock considering the extravagant lifestyle that he's grown accustomed to. Scrushy used his ill-gotten gains to buy four luxury homes, fast boats and cars, expensive wine and a museum-like art collection featuring paintings by Picasso, Renoir, Chagall and Miró.
But for now, Scrushy is out on a $10 million bond--after he was forced to relinquish his passport, pilot's license and wear an electronic monitoring bracelet--a far cry from the lavish jewelry he used to wear. It's no wonder that health care in the U.S. costs so much when a gang of CEOs like Scrushy are making themselves filthy rich.