June 11, 2003

There are many evils in the Medicare bill that will be marked up in the Senate Finance Committee tomorrow. The most significant are the inherent riskiness of the entire scheme, and the likely damage to traditional fee-for-service Medicare that has served the country so well. I would like to address three other evils worthy of note:

First, for the first time in history, seniors who do not wish to enroll with a private insurance company will be denied benefits. The only way that seniors can get drugs under this legislation is if they enroll in a private prescription drug plan, a PPO, or an HMO. And the Federal Government would pay for all private insurance company initiatives. This scheme is an ideological experiment, with seniors as the guinea pigs.

Second, the Senate bill would treat low-income seniors like second class citizens. For the first time ever, seniors whose income is below approximately $8,900 a year would not be able to get their Medicare benefits. This is an outrage. One of the defining features that has made Medicare such a success is its guarantee of coverage for all Americans who work hard and pay into the Medicare Trust Fund. The Senate bill, however, would deny low-income seniors, who paid in just the same as others, the right to get their drugs under Medicare.

Finally, the bill includes what amounts to a "tax" on employers who provide retiree coverage and the seniors who currently benefit from it. Any contributions made by these employers for drug costs would not count toward the beneficiary’s stop-loss. The practical effect this will have is that employers will stop offering retiree coverage, because having such coverage would actually penalize -- not help -- seniors. Employer-sponsored retiree coverage is already declining. We should not make matters worse.