Tough Medicare choices for Congress

This week Congress revives a decade-old battle over Medicare and prescription drugs, as President Bush and the Republicans try to leverage enough votes to pass the largest benefits increase in the program's history.

Call it the politics of the local pharmacy. With prescription-drug costs expected to jump by nearly $2 trillion in 10 years, more and more seniors - America's most consistent voters - struggle with how to pay the bill.

It's good politics to say government will help. For the past two election cycles, seniors have been a near-ubiquitous prop in political campaigns in both parties, and Democratic presidential hopefuls are already highlighting Medicare as a lead issue in the 2004. They even use the same formula to describe the problem: No one should be forced to choose between rent or food and prescription drugs.

"It's big," says John Zogby of the polling firm Zogby International. "Healthcare now shows up as No. 3 in terms of issues nationwide, and a lot closer now to [No. 2] terrorism and [No. 1] the economy."

Three times Republicans have muscled their version of a solution through the House, only to see it flounder in the Senate. This time, they say, will be different.

"We have a triad of possibilities: [Speaker] Dennis Hastert, who has pushed this issue for years; a senator [new majority leader Bill Frist] who has held a beating heart in his hand, and a president who will make this his No. 1 priority when he gets back from the Middle East," says Paul Jacobson, a spokesman for Senator Frist, a leading heart and lung surgeon in private life.

But with the number of seniors in the United States set to double over the next 30 years, it will be a challenge to add the single largest benefit increase in the history of Medicare, which was enacted in 1965 to provide health care for seniors and people with disabilities. Experts say it will accelerate the collapse of the system, as the number of workers paying into the system drops from 7 to 2.9 per retiree.

This demographic bind is straining health systems across the industrialized world. In Britain, the ruling Labor Party is considering requiring (or strongly urging) people to quit smoking, eat more veggies, and commit to an exercise routine as a condition for receiving government health benefits, according to British press reports. But it's unclear whether such government mandates will lower the demand for prescription drugs. "There are good reasons to do such things, but it's unclear whether that is doing a favor to the people paying the bills," says Gary Burtless, a senior fellow at the Brookings Institution in Washington.

"The reason that people in most other rich industrial countries do not spend as much on drugs as Americans do is because there is stiff negotiation between the government and the drug manufacturers," he adds.

Personal healthcare spending in the US has increased from $23.4 billion to $1.2 trillion from 1960 to 2001 (the most recent year available), according to the Congressional Research Service. While personal health costs are expected to increase at an average rate of about 7 percent a year between 2003 and 2012, prescription-drug costs are jumping at a rate of nearly 16 percent a year. Those increases, added to the looming demographic bind, leave Congress with tough options.

For Republicans, adding a prescription drug benefit to the current Medicare program means backing a potentially huge new entitlement at a time when their goal is to cut taxes and limit the size of government.

On March 4, President Bush proposed three broad options for seniors - ranging from prescription drug discount cards for people remaining in the original fee-for-service Medicare program to managed care plans with broader prescription drug coverage. It would, in effect, give people an incentive to use private sector health plans.

Most Democrats have strongly opposed this approach, saying that those who participate Medicare program should get the same help in paying drug costs as those who exit the program. "There has to be a defined benefit," said Senate minority leader Tom Daschle (D) of South Dakota this week. "But I start with the hope, and I must say the expectation, that we can work together to find common ground."

The effort to find common ground will be much more important in the Senate than in the House, where GOP leaders can use House rules to limit debate. In the Senate, Democrats could opt to prolong debate indefinitely, unless Republicans find 60 votes to pass their legislation.

There are potential pitfalls for both parties if they fail to come up with a solution in this session of Congress. "This could be a Republican Achilles' heel, if they do not do act before the election," says pollster Zogby. But there's also a downside for Democrats, if they are perceived as blocking a plan.

"The voters are split on whether it should be an expansion of Medicare or a private sector initiative.... What they're saying is: We don't really care. Just do something," he adds.

Meanwhile, some of the most powerful lobbies in the nation are converging on Congress to influence the outcome. Pharmaceutical companies - leading contributors to federal campaigns in the last decade - strongly oppose any effort to use federal clout to negotiate down drug prices.

However, the influential American Medical Association is throwing its weight behind President Bush. "The AMA believes that patients need to continue existing benefits and have expanded choice, such as the federal employees' health benefit program, and we're happy that President Bush has suggested a plan that goes in this direction," says Donald Palmisano, president-elect of the American Medical Association.