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Author(s):    ROBERT KUTTNER Date: March 5, 2003 Page: A23 Section: Op-Ed
Take Bush's designs on Medicare. What the administration really wants is to privatize Medicare. This means that seniors would be herded into HMOs. The federal government's annual contribution would be capped. If you couldn't afford decent HMO coverage (if there is such a thing), too bad.

This strategy neatly serves two conservative purposes. First, privatize everything possible. Second, cut federal social outlays, the better to finance tax cuts for upper brackets. Unfortunately for Bush, Medicare is justifiably popular. Despite all the Republican blather about "choice," the one health plan for older Americans that provides completely free choice of primary-care doctors, specialists, hospitals, and treatments is, of course, good old conventional Medicare. As even the doddering know from bitter experience, it is HMOs that restrict choice.

However, Medicare does not provide prescription drug coverage. Why not? Mainly because the pharmaceutical industry has resisted comprehensive Medicare drug coverage, fearing that the government would use its bargaining power to trim exorbitant drug industry profits.

Now the White House is using the widespread clamor for prescription drug benefits to manipulate seniors into "choosing" HMOs, using Medicare reform as the bait.

Last month the White House leaked plans providing drug coverage to seniors who opted for HMOs while giving none for people who stayed with traditional Medicare. Howls of protest, from Republican as well as Democratic lawmakers, sent that crude idea back to the drawing board.

The administration's latest scheme is a poorly disguised variation on last month's plan. In a proposal carefully worked out with the pharmaceutical and HMO lobbies, seniors would get drug benefits under conventional Medicare but with astronomical deductibles - between $4,500 and $7,500. You'd have to pay that much money out of pocket before a penny of prescription drug coverage would kick in. To put that number in perspective, $7,500 is more than a third of the median income of the typical 70-year-old.

This token drug benefit, plus a very modest discount card that is mainly a marketing ploy of the drug industry, is expected to fool seniors into believing that Bush is offering drug coverage under Medicare. But the out-of-pocket deductibles are so exorbitant that fewer than 10 percent of the elderly would actually get any reimbursements.

Under Bush's plan, coverage for routine prescription expenses would be available if you shifted from traditional Medicare to a private HMO, but many other restrictions would offset the increased drug benefits.

We have been down this road before. In the 1990s, the HMOs thought they could profit from targeting the senior-citizen market, and Congress hoped to save money by giving HMOs a shot at managing costs.

HMOs advertised heavily, promoting - among other benefits - prescription drug coverage. They also tried to target healthier segment seniors, using come-ons such as health clubs (bedridden critically ill people are not attracted to gyms).

But many of the people who opted for HMOs had the effrontery to get sick. HMOs turned out to be less efficient than traditional Medicare. So HMOs unceremoniously dumped millions of money-losing patients. Others, who didn't like the limits on choice, moved back to traditional Medicare voluntarily.

So the Bush approach to Medicare reform had a full field test, and it flunked. No wonder Bush needs a war of mass distraction.

Medicare does need reforming, and older people do need prescription drugs. The Democrats' plan is better: It allocates more federal money, does it via traditional Medicare, and uses government's buying power to reduce drug costs.

But neither party really wants to tackle Medicare costs, and both have tried to solve the problem on the cheap by just reducing payments to doctors, hospitals, and medical education. Once there was plenty of fat to squeeze out, but today the budget cutters are cutting into bone.

One of the major parties should realize that true Medicare reform can come only in the context of universal, national health insurance, so that every possible penny goes to delivery of health care rather than to marketing schemes and insurance company profits.

Ideological zealots tend to overreach. Bush's bogus Medicare reform could do useful damage at the ballot box. If he pressures Republicans into backing it, Democrats will have a fine election issue. But that will be small comfort to America's retired people, who will find themselves with less choice and higher out-of-pocket costs if they want decent health care.

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