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Medicare Reform: No Miracle Drug for the GOP


When President George W. Bush kicked off a debate on Medicare reform last January, GOP strategists were exultant. By promising a new prescription drug benefit for seniors, Bush could neutralize an issue that Democrats have used to flog Republicans since the '60s. But as Congress heads into the homestretch on a Medicare overhaul, the opportunity looks increasingly like a trap. Bush will lose points if the Medicare reform effort fails. Yet voters may be disappointed by the bill that's likely to wind up on his desk.

The problem: The promised $400 billion drug plan will fall far below the public's expectations. "People have in mind the benefit they had when they worked," says Robert J. Blendon, a Harvard University expert in health care and public opinion. "But $400 billion does not get that level of benefits. Seniors are going to be very unhappy." A typical employer plan covers 70% of a worker's drug costs. But the Hill versions of a Medicare fix would pick up less than a third of a typical senior's expenses. So it's no wonder that support for Bush's handling of Medicare is slipping. An Aug. 24-26 Gallup Poll showed that 40% of those questioned approved of how he is managing the issue, down from 44% in late January.

The resistance may be strongest among those nearing retirement. Gallup reported that 81% of 50-to-64-year-olds think the new law won't do enough to help seniors pay for medications. And they fear losing employer-paid insurance when they retire. Today, just 23% of large companies offer retiree health benefits, down from 40% a decade ago. Administration analysts figure that coverage could drop by an additional one-third if businesses shift more responsibility for retirees to an enhanced Medicare.

The House and Senate must still work out key differences in their bills. The biggest: How much should Medicare be shifted to private insurers? Some union-connected groups are blasting the House version as an attempt to gut the program. AARP, the powerful seniors' lobby, has expressed growing reservations about the House bill as well, though it still wants a drug benefit passed this year. But House conservatives won't back off from their bill's reforms.

Still, the basic drug insurance is similar in both bills. And in each, most benefits won't kick in until 2006. Thus, voters won't know what the new law will mean to their personal drug costs when they go to the polls in '04. Many will expect the worst, and Dems will play to that uncertainty. "The speculative fear that you're going to lose something you value today is a recipe for disaster for politicians," says Michael Franc, vice-president for government affairs at the Heritage Foundation.

The political minefields may be one reason Bush has kept a low profile in the Medicare debate. Since his own ambitious restructuring ideas were shot down in January, Bush has refused to push for specific reforms. "He's keeping his distance," says a Senate GOP aide.

But GOP leaders figure they must move ahead despite the dicey politics. Aides to Senate Majority Leader Bill Frist (R-Tenn.) say that failing to pass a Medicare package will hurt the GOP far more than enacting an imperfect plan. Jonathan Oberlander, a professor of social medicine at the University of North Carolina, agrees: "If I were in the White House, I would tell [GOP lawmakers], 'If we cannot pass this, you are going down."'

In a close election, Medicare could be critical in senior-heavy states such as Florida and Pennsylvania. That's why, in the end, Bush will likely pressure conservatives to swallow a bill they don't like and take their chances on Election Day. Medicare reform won't be the bonanza the GOP was hoping for. But it will still be better than doing nothing at all. Harvard University economist Martin Feldstein sounded a lot like an aspiring Federal Reserve chairman at the Fed's annual conference in Jackson Hole, Wyo. Feldstein, a leading candidate to take over the central bank when Alan Greenspan steps down in a few years, backed Greenspan's flexible policy approach and rejected using inflation targets to set interest rates. He also repeatedly praised President Bush's big tax cuts, saying they were particularly well-timed. President Bush isn't the only one suffering in the polls: His top Cabinet aides are losing popularity, too. Attorney General John Ashcroft's positive rating has sagged to 48% amid liberal and conservative criticism of his civil liberties record, according to an Aug. 12-17 Harris Poll. Defense Secretary Donald H. Rumsfeld has slipped from 71% in April to 55%. At the bottom of the heap: the invisible man, Vice-President Dick Cheney, at 42% positive, 45% negative. Ideological opposites Representatives John Conyers Jr. (D-Mich.) and Darrell Issa (R-Calif.) are coming together on the idea of a constitutional amendment to allow foreign-born citizens to serve as President. The move would clearly benefit Arnold Schwarzenegger, the Austrian-born actor currently running for governor of Issa's home state. But Conyers may have another candidate in mind: Canadian-born Governor Jennifer Granholm of Michigan, a rising Democratic star.


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