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Washington's fake "reform"
Wrecking Medicare for profit

By Eric Ruder | December 5, 2003 | Page 12

SOME 40 million seniors and disabled had high hopes that a sweeping Medicare "reform" bill would bring them relief from high prescription drug prices. But reality will be a bitter pill to swallow.

And if there's any doubt about it, remember that George W. Bush said that he was "looking forward" to signing this legislation. Supporters of the new Medicare "deform" measure, which passed the Senate last week, trumpet the bill's prescription drug coverage--while playing down its windfall for drug companies and immense government subsidies to insurance corporations.

But even the drug benefit is stingy--at best. Of the first $5,100 in annual drug costs, seniors will have to pay $3,600 out of pocket--in addition to a $420 annual premium.

And for many of the poorest and sickest seniors and disabled, the situation will grow worse. That's because they could lose prescription drug coverage that they now have under Medicaid, the government health care program for the poor--if the drugs that they need aren't covered by the new Medicare program for their region.

And those are just a few of the holes in the talked-about part of this legislation. Hidden away in the rest of the bill are provisions that will wreck the Medicare system altogether. The legislation ends Medicare as a basic right that all people are entitled to--and introduces an income-linked formula for receiving benefits, which opens the door to making ever fewer people eligible for coverage.

Sen. Orrin Hatch (R-Utah) ripped critics of the bill, saying that they wanted to spend more money--and "don't believe in the private sector." But for all his talk about "letting the market work," the bill sets aside $18 billion in subsidies for insurance corporations to "help them to compete" with the government-run Medicare program. In other words, government is paying industry giants in the name of "free market efficiency."

"The drug companies are going to be making out like bandits," said Alphonso DiDomenico, a retired apartment house doorman in Los Angeles. "The people who really need Medicare are going to have to struggle." Shamefully, Democrats--after vowing for years that they would stop the Republicans from hurting the Medicare system--handed the Bush White House the margin of victory.

Eleven of the Senate's 48 Democrats voted in favor, more than covering for the nine Republican defectors who voted against the legislation. Among the contenders for the Democratic presidential nomination, Sens. Joe Lieberman (D-Conn.) and John Kerry (D-Mass.) both criticized the bill--but then skipped out on the vote so that they wouldn't be on record opposing the bill when it came time to accept campaign contributions from the health care industry.

With such cowardly behavior from Democrats, Bush may escape blame for this disastrous legislation as a backlash develops. Opinion polls already show that people 65 and older oppose the measure by a margin of 49 percent to 33 percent. In fact, surveys show that the more seniors know about the bill, the more they oppose it.

Support for the legislation would be even lower--if not for the disgraceful support of American Association of Retired Persons (AARP). When the AARP top brass signed on, they launched a $7 million advertising campaign to build support for Bush's proposal.

Many AARP members are infuriated. Glenn Buhr, for example, tore up his AARP membership after paying dues for more than 20 years. "I told them that we were shocked by their support of an obvious Republican campaign," said Buhr, a retired college professor from Des Moines. "It's a sellout to the insurance industry."

But why would the AARP back a plan that will have a disastrous impact on its members? Big bucks, that's why. In reality, the AARP is a big business, which gets "royalties"--a nice term for kickbacks--for selling insurance policies and prescription drugs to its members.

These transactions account for about 60 percent of AARP's annual revenue. If the AARP takes in just 5 percent of the new dollars spent under the Medicare legislation, it stands to make $58 million a year on the drug coverage provisions alone.

In the end, the new Medicare bill won't contain costs--as its supporters claim. "There is no convincing empirical evidence that overall health spending per Medicare beneficiary would be reduced by privatization," said Princeton University economist Uwe Reinhardt. This isn't a mistake. The bill's real aim, says Reinhardt, is to transfer "more of the cost of elderly health care onto the elderly."

And there's another benefit to getting private insurers into the act--from the politicians' point of view. "Managed-care companies will act as buffers, shielding Congress and the government from direct criticism," says Dr. Schumarry Chao, a health care consultant in Los Angeles.

This isn't "reform." It's about Washington putting a squeeze on the most vulnerable segments of society to please their corporate backers.

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