Congress passes Medicare overhaul

Posted 10:28am December 2

by Nell McGarity
U-WIRE Washington Bureau

On Tuesday the Senate passed a historic Medicare bill that will expand prescription drug benefits to patients, open the system to competition from private sector insurers, increase federal payments to hospitals and doctors, and offer incentives to employers who offer coverage for retirees.

The bill, passed a few days earlier by the House, will go into effect in three years, has been marred by much controversy and partisan debate.

“This is an extraordinary day for seniors and indeed all Americans. The legislation that we just passed is consequential. It’s far-reaching for every American. It touches all of us in material ways, in meaningful ways,” said Senate Majority Leader Bill Frist, R-Tenn., in a statement issued after the bill passed.

“This truly bipartisan legislation modernizes Medicare and provides preventive care, disease management and especially prescription drugs for our nation’s 40 million seniors and individuals with disabilities. For the first time in its 40-year history, Medicare will offer true, comprehensive health care coverage,” said Frist.

However, his more optimistic perspective on the 678-pages bill that is estimated to cost $400 billion in the next decade and $1 trillion in the 10 years following, could not be more different than the Democrats that have been speaking against it and who tried to block its passage.

“Rather than improve medical care and decrease prescription drug costs, the current plan would do the exact opposite. Under the Republican bill, 25 percent of Medicare beneficiaries will actually pay more for prescription drugs. Two to 3 million of those seniors will lose their retiree drug coverage, and as many as 7 million of the sickest and poorest seniors will pay more than they pay today under Medicaid,” said Senate Minority Leader Tom Daschle, D-S.D., in a statement released after the bill passed.

This debate mirrors the long running vision of Medicare that the Republicans and Democrats hold, one searching to offer greater private sector involvement and the other who prefers government oversight of social service programs.

This change, the greatest in reshaping the program since its inception in 1965, offers greater prescription drug benefits to any Medicare patient who needs them. Their coverage can come from a private insurance policy that will pay for their drugs, a preferred provider organization or HMO.

Regardless of their choice, they will pay a monthly premium for an annual deductible. The government will pay for three-fourths of drug expenditures up until $2,250 with the exception of those that spend over $3,600 per year in which case the government could pay up until 95 percent. But within this structure, it is unclear how many options of providers that patients will have.

Built into the bill is a major departure from the Medicare tradition of charging the same price for the same services to all patients. Now those with incomes above $80,000 will be charged greater prices and cost for the yearly deductible for out patient services will be readjusted every year for inflation. While it does help low-income patients, it does not reach as many was Democrats were hoping for.

But perhaps the most hotly contested aspect of the bill is a six-year study that begins in 2010 that will place Medicare prices in direct competition with private health plan prices. Democrats fear that this will cause patients into private health plans while some conservatives wanted this type of competition to be permanent and more widespread than the testing area is outlined to be.

“The whole bill is controversial and I think that the notion of private insurers versus government is less so than we think. The government has always maintained control over price. This is the major departure,” said Professor Sara Rosenbaum, director of the Center for Health Policy Research at The George Washington University.

Many Democrats that have been critical of the bill have also described the expansion as a victory for special interests, and as a way to further Republican interests without considering the needs of seniors and patients, vowing to repeals portions of the bill since it is poised to be signed into law.

“It is such a large and complex bill with so many accusations that no one knows what it will be,” said Rosenbaum.

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