Medicare Losing Universality? When More Means Less

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Misty L. Trepke

http://www..com

 

When More Means Less

http://www.nytimes.com/2003/07/16/opinion/16REIS.html?th

 

ASHINGTON

In its headlong rush to provide a prescription drug benefit for the

elderly and disabled, Congress risks abandoning a fundamental

principle that has been a hallmark of Medicare since the program's

inception in 1966. That principle — universality — ensures that all

Medicare beneficiaries, no matter where they live or what their

financial circumstances, are eligible for the same basic benefits.

 

If either the Senate or House bill is enacted, the ideal of

universality will be history — though each proposal undermines this

principle in a different way. In their conference to reconcile the

two bills, which first met yesterday, members of both the House and

Senate should work to ensure that Medicare's universal nature is

preserved.

 

To save money, the Senate proposal would deny the new drug benefit

to the 6.4 million Medicare beneficiaries — about one in six — who,

because of their limited incomes, are also fully eligible for

Medicaid, the program that covers the health care costs of some of

nation's poorest residents. These so-called dual eligibles would be

required to obtain drug coverage through their state's Medicaid

program. Under current practice, Medicare pays first for services

provided to dual eligibles, while Medicaid picks up any costs or

charges Medicare doesn't cover.

 

The difference for these beneficiaries is more than a matter of

which program pays for their prescriptions. Because each state

determines its own Medicaid drug benefit, the drug plan available to

dual eligibles will vary depending on where they live. Although many

state Medicaid programs have provided generous prescription drug

coverage in the past, spiraling Medicaid costs and severe budget

difficulties have forced many of them to cut back. Some have imposed

limits on the number of prescriptions that a beneficiary can fill

each month; others have restricted access to some drugs. Thus,

Medicare's poorest participants — those who qualify for Medicaid —

could find themselves with skimpier drug coverage than other

beneficiaries.

 

In addition to being unjust, denying Medicare's poorest participants

access to a benefit available to other Medicare beneficiaries

imposes an unfair burden on hard-pressed states, which already pick

up the 43 percent of the Medicaid bill that the federal government

does not cover. Once Medicare starts providing drug coverage, states

will be tempted to shift some of their burden for dual eligibles,

which constitutes more than one-third of total Medicaid costs, to

federally financed Medicare. (They can do this by simply lowering

their maximum income limits for full Medicaid eligibility.)

 

If states yield to such pressures, millions of low-income elderly

and disabled Medicare beneficiaries could find themselves without a

Medicaid safety net. They will no longer be dual eligibles, and thus

will qualify for a Medicare drug benefit, but they will be denied

Medicaid's coverage for other services.

 

The House proposal undermines universality as well — at the other

end of the income spectrum. Its plan would use a beneficiary's

income to determine the threshold at which catastrophic protection

kicks in. Elderly people with incomes below $60,000 would have all

their drug costs picked up once they spend $3,500 out of pocket;

those with incomes of $200,000 or more would have to spend nearly

$12,000 on drugs before they received such protection.

 

While a good case can be made for asking the upper-income elderly to

pay higher premiums, varying the benefit according to beneficiaries'

incomes is simply impractical. Income-related benefits are confusing

and intrusive for participants and difficult to administer, since

Medicare does not collect information about participants' incomes.

Income-related premiums, on the other hand, could be collected quite

simply from more wealthy beneficiaries when they filed their annual

tax returns.

 

Both the Senate and House proposals further undermine universality

by allowing considerable variation from plan to plan, and place to

place, in the drug benefit that private insurers will offer

beneficiaries.

 

All plans will be required to offer overall benefit packages worth

the same dollar amount to an average beneficiary. But beyond this

constraint, insurers would have considerable discretion. They could

set different deductibles and require different cost-sharing rates

for all or certain classes of drugs. Beneficiaries filling the same

prescriptions could pay quite different amounts out of pocket

depending on the plan they chose and the state in which they live.

 

There is nothing wrong with a system that offers options that differ

by region or are more affordable to some beneficiaries than others.

That's how Medicare and the supplemental insurance purchased by most

elderly people work today. Such choice could spur competition that

improves the quality and efficiency of both the drug benefit and

Medicare itself.

 

But choice should not come by sacrificing Medicare's commitment to

universality. A modern Medicare program should ensure that, in

addition to other options, all beneficiaries — rich and poor alike —

are guaranteed access to an identical basic drug benefit whether

they live in Portland, Me., Portland, Ore., or Portland, Tex.

 

 

 

 

Robert D. Reischauer, director of the Congressional Budget Office

from 1989 to 1995, is president of the Urban Institute.

 

Copyright 2003 The New York Times Company