Thursday, November 30, 2006
Medicare Muffins
BY SOPHIE KASIMOW
GUEST COMMENTATOR

In a recent episode of NBC’s “ER,” Dr. Kerry Weaver was invited to speak on a local Chicago news station after she commented that many sick patients who roll through the doors of County General Hospital are there because they lack affordable health insurance. These individuals, as many of you are all too well aware, receive little or no preventative care and delay seeking medical attention until a health crisis warrants a trip to the emergency room where treatment costs skyrocket.

Because our health insurance system allows millions of Americans to slip through the cracks, many people don't have reliable health insurance until they become eligible for Medicare (or land themselves in prison). Original Medicare has been, for over 40 years, a highly successful example of universal health care for older and disabled Americans. This past year, Medicare experienced the biggest change since its inception, the implementation of a prescription drug benefit (Part D). Part D represents not only a significant programmatic change, but also a philosophical shift; unlike Original Medicare, Part D is a fully privatized program (all drug coverage must be purchased from private insurance companies). And even though the for-profit pharmaceutical and insurance companies receive billions of taxpayer dollars to provide this drug coverage, Medicare was barred from the price-negotiating table.

A Kaiser Daily Health Policy Report issued after the midterm elections quoted Nancy Pelosi (D-Calif.) as saying she will “seek to pass legislation to allow Medicare to negotiate directly with pharmaceutical companies for discounts on prescription drugs within the first 100 hours after the house convenes.” A variety of ideas are bouncing around, though. Pelosi’s comments indicate that she would support repealing the 2003 Medicare Modernization Act (MMA) provision that prohibits Medicare from bargaining with drug companies, but without a guarantee that price negotiation would be required, this type of MMA amendment may satisfy consumers’ politics – but not their pockets. Even so, allowing for negotiation is a good first step because it will pave the way for creating a drug benefit under Original Medicare.

If Medicare, like the Veterans Administration, were able to negotiate with pharmaceutical companies directly, studies show that the resultant savings would be enough to provide individuals with Medicare drug coverage that looked less like a doughnut and more like a muffin (no hole). And if the hundreds of Medicare beneficiaries I've counseled are any indication, doughnuts aren't just unhealthy to consume, they also make for an unhealthy insurance model, leaving many people struggling to find a private plan that covers their prescriptions with more than a crumb of reliability.

Of course, there’s an irony in making Medicare an effective price negotiator: the primary argument in favor of market-based health care is that markets are better at negotiating prices than the government. Experience, however, demonstrates that the market model is simply not the best baker in the health care kitchen. While Medicare could successfully bargain for lower drug prices for the existing private plans, Medicare should have the opportunity to negotiate prices on behalf of a plan it can stand behind, a real Medicare drug benefit (with emphasis to highlight the incongruity of calling Part D a “Medicare” drug benefit – the program is quite unlike the structure of Original Medicare). Congress should now take the opportunity to support what should have been the original design of a drug benefit. Pesky hindsight.

The degree of health literacy among many Medicare beneficiaries is limited to “I show my red, white, and blue card when I go to the doctor” and “it works.” These same beneficiaries must now wade through a sea of Part D plan choices, and even armed with good research they are forced to take a gamble with their drug coverage. There are no good answers for questions like, “You mean I’m locked into my plan for the whole year but they can change what drugs they cover anytime?” or “How can I plan my monthly budget if my pills cost $25 this month but $200 next month?” The difficulty of choosing a plan is exacerbated by the at best unhelpful and at worst borderline villainous marketing techniques of some private insurance companies. To woo seniors, Humana already offers an evening of free entertainment that concludes with an insurance pitch; why not expand on this idea and open a line of slot machines with names such as “Mortgage or Medication?” or “Pills vs. Bills?”

When asked why she agreed to speak on local news about the health care system, Dr. Weaver quipped, "well, it's about time somebody put something worthwhile on TV.” The joke aside, Dr. Weaver makes a good point, a point echoed by polls across the country. And if polls and pop culture references are any indication, people are ready to talk about comprehensive health care reform. Improving and perhaps expanding Medicare is a great place to start that conversation. Original Medicare has garnered widespread support over the years due in part to its ability to negotiate prices and pay doctors and hospitals directly. If the newly elected Democratic Congress allows Medicare to negotiate drug prices with pharmaceutical companies, that will be at least a step on the path to offering a drug benefit administered directly by Medicare, muffin-style.

Sophie Kasimow is a research intern at The Hastings Center. Before coming to the Center, she was the facilitator of the New York State Medicare Savings Coalition while she worked at the Medicare Rights Center, the largest independent source of health care information and assistance in the United States for people with Medicare.

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