Bush and the Privatization of Medicare

On July 15, 2008, President Bush vetoed H.R. 6331, a Medicare reform bill intended to reverse an automatic 10.6 percent cut in payments to doctors and hospitals. The cut had taken effect on July 1st. Within hours, the veto was overridden as Republicans rejected Bush’s effort to help the insurance industry. The House voted 383 to 41, and the Senate, where the Republicans had originally blocked the bill with a filibuster, voted 70-26 to override.

The bill contains many provisions that would improve the Medicare program, but the most immediately important provision was reversal of the 10.6 percent automatic cut in doctors’ and hospitals’ payments. That cut was part of previous Medicare legislation, and if it had been allowed to continue in effect, many thousands of seniors would have had to forego vital medical treatment. Doctors, who now complain about the rates of reimbursement, would simply have refused to treat Medicare patients. The new law will not only reverse the cut, but it will increase the rate of doctors’ and hospitals’ reimbursement by 1.1 percent.

The reason the President and conservatives in Congress opposed the bill was a provision in the bill that would slightly reduce the amount of reimbursement paid by the government to private insurance companies which manage “Medicare Advantage” programs. That reduction was necessary to pay for the other increases provided for in the bill.

In 2003, when there was a Republican President and Republican Congress, the Congress provided for private insurance companies to conduct their own Medicare programs in competition with the governmental Medicare program. Although supposedly private, these “Medicare Advantage” programs are reimbursed by the federal government. Some Republicans who dislike Medicare as a “socialist” program, believed that having private enterprise run Medicare would make it far less expensive and far more efficient. The idea was to gradually privatize all of Medicare. As it turned-out, the private programs were far more expensive than Medicare and far less efficient.

The high cost of Medicare Advantage, and particularly of its fastest growing program, PFFS (Private Fee for Service), have been creating a major fiscal dilemma for Medicare. Private plans in general receive 13 percent more from the government than it would cost traditional Medicare to cover the same people for the same treatment. Last year the Congressional Budget Office estimated that those additional payments would cost Medicare $149 billion over the next ten years. PFFS plans are the least efficient of Medicare Advantage plans. It costs 17 percent more, on average, to cover a beneficiary under PFFS than under regular Medicare. Nearly half of all PFFS excess payments go to administrative costs, marketing, and profits, rather than to additional health benefits to enrollees.

Congress should save money and totally eliminate all Medicare Advantage plans. It should cover everybody under the less expensive, more efficient, regular Medicare program.

Bush ran for president as a “compassionate conservative.” He has proven himself to be a callous ultra-conservative. He has surrounded himself with right-wing zealots who want to privatize Social Security and Medicare.

Social Security was created as a safety net for older people. It was recognized that most people do not have the means, discipline, or ability to create and fund retirement programs. Before Social Security, millions of people were suffering terrible hardship in their old age. Having the government take some money from people’s earnings and paychecks helped provide them with some guarantee of dignity in their advancing years. It was not welfare, it was insurance.

Medicare was a natural extension of the concept behind Social Security. In 1965, Congress and President Johnson recognized that one of the major sorrows for all senior citizens was their gradual decline in health. They knew of the inability of most people to thoroughly plan for the infirmities of advancing years. Medicare has brought credit on our nation and saved millions of lives. Bush and his cohorts want to abolish it. They don’t care that millions of people simply would not be able to save and plan for old-age illness. They think such people are irresponsible. But it is Bush, Chaney, Rove, and their right-wing accomplices that are irresponsible--and heartless.