Medicare Standards

The overhaul of Medicare is sufficiently sprawling and complex to allow all sides to make all manner of claims about it. But unless you are a senior and need specific services, you probably won’t notice the reform’s shortcomings when politicians celebrate its passage, perhaps sometime this fall. So a letter written by several senators that lays out a set of standards for the bill makes what is at stake easier to understand, and it will give the committee reconciling the House and Senate versions of Medicare a forceful sense of what will likely pass in the Senate.

The letter is bipartisan, or tripartisan if one believes Sen. Jim Jeffords of Vermont is in a separate party. Moderate Sen. Olympia Snowe, who helped draft the letter, has signed on and so have conservative Sen. Mike DeWine of Ohio and liberal Sen. Edward Kennedy of Massachusetts – the letter has the signatures of seven senators whose support matters to passing whatever comes out of the conference committee.

They are realistic in their description of what they find acceptable for a Medicare drug benefit; they recognize that House members cannot return to their chamber with simply the Senate version. Instead, they demand an equal benefit for all seniors through preserving traditional Medicare, which the House would like to phase out. And they want comprehensive coverage for qualified recipients up to 160 percent of the federal poverty level. The House bill offers some substantial benefits for low-income seniors but the two differ in the level of coverage above 135 percent of poverty, the level of co-payment and the amount recipients are expected to pay between the initial level of coverage and the higher catastrophic coverage. Conferees have a lot of room for negotiation in this area and should find affordable compromise.

The senators also want Medicare to include a provision to ensure all seniors have access to a prescription drug benefit no matter where they live. This demand is crucial for rural America, where a lack of choice is much more likely. This is where ideologies clash over the government’s role in health care and where the real fight – after the skirmish over the president’s discount cards ends – will take place. If Congress has an interest in treating seniors fairly no matter where they live in this country, it will agree to the Senate mechanism for ensuring benefits where private plans are not offered.

The senators are not alone in offering advice to the committee. Last week the nation’s governors asked conference chairman, Rep. Bill Thomas, to include in the package a House plan that would over 15 years shift Medicaid-eligible seniors fully onto Medicare drug coverage. The governors’ interest in this is clear enough – states have to help pay for Medicaid, but Washington picks up the government cost for Medicare. Unfortunately, the approximate cost of this shift just for prescription drugs is between $30 billion and $70 billion in a bill with a total 10-year cost capped at $400 billion.

Total coverage for phasing out Medi-caid for this group would cost $400 billion. Instead, the Senate approved an $18 billion increase to Medicaid that does not require a state match, which may be the best states can expect.

There remains a chance that Congress will not be able to bridge the ideological divide that separates the House and Senate versions of the Medicare drug bill, despite the president’s request to Congress to complete the legislation quickly. Maine’s interests do not entirely align with the details spelled out in the senators’ letter, but they match closely. Medicare conferees will likely find other rural states reaching the same conclusion, setting a clear standard for what should be acceptable to a majority of the Senate.