Statement by Ron Pollack, Executive Director, Families USA:
"The Medicare re-structuring proposals re-introduced by Senators Breaux and Frist constitute a riverboat gamble. They may sound enticing, but they are likely to leave seniors, especially those with illnesses and chronic conditions, considerably worse off than they are today.
"The Breaux-Frist proposals offer a solution that may be worse than the problem they seek to redress. By relying on a voucher-type system under which private health plans compete with one another as well as with the traditional Medicare program, the proposals raise the following problems:
· First, this approach will drive up the costs of the traditional Medicare program, because the healthiest beneficiaries are the ones most likely to sign up for private plans, leaving the sickest-whose care is more expensive-in traditional Medicare. As a result, the per person costs of the traditional Medicare program will escalate, putting people who need health care the most at greatest risk of higher expenses and fewer benefits.
· Second, the proposals rely on private health plans for Medicare re-structuring even though these plans have abandoned hundreds of thousands of seniors from the Medicare+Choice program in recent years. In the last two years, 106 plans dropped out of Medicare+Choice altogether and another 111 reduced their service areas. Many other plans increased premiums and reduced benefits, rendering seniors vulnerable to 'bait and switch' practices.
· Third, there is little reason to turn Medicare over to private health plans when Medicare has done a better job than the private sector in controlling per person health care costs. For the last three decades, per-person private health insurance costs have increased faster than Medicare. Hence, reliance on private health plans to protect Medicare's solvency is based more on ideology than empirical data.
· Fourth, the Breaux-Frist proposal gives unwarranted credence to the Federal Employees' Health Benefit Plan (FEHBP) as the model for re-structuring Medicare. The FEHBP system has not moderated costs better than Medicare; it serves a much smaller population that is younger, healthier, wealthier, and more attractive to private insurers; and the number of HMOs offering health coverage to federal employees and retirees declined from 476 in 1996 to 277 in 2000.
"Congress should proceed with abundant caution before restructuring a popular and effective program that has served seniors well for three-and-one-half decades to an unreliable, new program that delivers less to seniors at greater cost.
"The Breaux-Frist proposals also offer a disappointing basis for establishing a much-needed prescription drug benefit. Seniors should not need to rely on private health plans to receive this crucial coverage-especially given those plans' unimpressive and unreliable record with drug coverage for seniors. Like physician and hospital care, prescription drug coverage should be integrated into the Medicare program."
