Medicare: Compare And Contrast

by hilzoy

I've seen a few comments on various blogs saying that the problems with the rollout of Bush's prescription drug program are inevitable, either because that's just what happens when government gets involved in something, or because rolling out a big new program is inevitably complicated. And Mark Schmitt argues that undermining public confidence in government was actually part of the Republicans' plan:

"Every problem they are encountering was built in from the start in the structure that forces elderly and disabled people, their adult children or helpers, to make immensely complicated financial and medical choices, for a benefit that amounts to nothing more than a modest discount on wildly inflated prices. This is what they voted for, and they know it. (...)

My thesis was that Republicans knew there would be a backlash against the Medicare bill, but they understood that it would take the form of a backlash against government in general, and that would be to their advantage. Seniors struggling over a dining table covered with complicated forms, small-print prescriptions, and no-win choices weren't going to be muttering, "Goddamn Dennis Hastert, I"m never voting for his party again." They would be muttering, "Damn government, can"t do anything right.""

Whether or not some or all Republican members of Congress actually made any such calculation (and if they did, they sold out the health and possibly the lives of senior citizens for political gain, and should be driven from office forthwith), people are, predictably, saying that the sorts of problems we're seeing are inevitable. That being so, it's important to ask whether this is, in fact, true. And lo! via Kevin Drum, TNR has a great article that tries to answer this question by comparing the rollout of Bush's Medicare prescription drug program to the rollout of Medicare itself. Excerpts:

"But consider what happened when the Johnson administration rolled out Medicare for the first time in July 1966. Back then, the obstacles were even more daunting than they are today. Rather than simply adding a benefit for a relatively narrow class of services (prescription drugs), introducing Medicare meant establishing an entirely new insurance program in just eleven months. There were concerns about hospital capacity: What if seniors held off on medical treatment until the benefit kicked in and then flooded facilities? There were also racial complications: LBJ had insisted that Medicare refuse payments to hospitals that didn't abide by federal civil rights guidelines. Since many Southern hospitals remained segregated, senior citizens there might have had no place to go.

So what happened on the day that this complex program was implemented? Thousands of senior citizens simply went to the hospital and got the health care they needed. "There were no crises that I remember," says Yale University political scientist Theodore Marmor, who worked in the office overseeing Medicare implementation and went on to write The Politics of Medicare, the program's definitive history. Newspaper accounts from the '60s back him up. Under the headline "medicare takes over easily," a Post writer described the program's first day as "a smooth transition, undramatic as a bed change." Three weeks later, the Times affirmed that "medicare's start has been smooth."

What did Johnson do right that Bush did wrong? Start with the people he put in charge. Today, the man directly responsible for Medicare is Mark McClellan, a physician and former Stanford economist. Though hardly a Michael Brown, McClellan has no prior experience when it comes to implementing social insurance programs. (His predecessor, Tom Scully, left CMS to become a lobbyist almost immediately after the Medicare bill passed.) The man Johnson tapped to run Medicare was Robert Ball, a longtime civil servant who had worked his way up through the Social Security Administration starting in 1939. He and other veterans helped design the program--urging, among other things, that the law take effect in summer, when hospitals would be least crowded.

Another difference between the two administrations is their willingness to take initiative. Last year, experts repeatedly warned the Bush administration that it had inadequate contingency plans in place, culminating in a December Government Accountability Office report that predicted with eerie accuracy exactly what has happened at pharmacies around the country these past two weeks. LBJ's team was far more cautious. Although confident that hospitals could handle any potential surges, it still drew up plans for transferring patients to overflow facilities, even lining up helicopters in Texas to provide speedy transport.

Granted, senior citizens probably need more hand-holding in 2006 than they did in 1966, because the new law channels its drug coverage through private insurance companies from which beneficiaries must choose. But that, too, is a distinction: While Bush talks of "choice" as his plan's greatest virtue, seniors seem bewildered by having to pick from as many as 52 different prescription plans, each one with different premiums, cost-sharing requirements, and lists of drugs covered. By contrast, Johnson administration officials had argued against inundating seniors with such options. "I would not have dreamed of going about this in a way that meant individuals had to choose from among all these possibilities," Ball says today. "I would have expected chaos.""

And bear in mind that the 'choices' the Bush program gives senior citizens are a bunch of different plans with different copays, different deductibles, and different formularies. For people taking various prescription drugs, just finding a plan that covers all the drugs they take may be a serious challenge. And, as I said in my last post, the plans can add or drop medications from the list of those they cover each month, while seniors are locked into their plans for a whole year. So even if seniors manage to navigate all these choices and find one that covers all their medications and works well for them, there's no guarantee at all that that plan won't drop the medications they take the next month, leaving them high and dry.

Personally, I value being able to choose, with my doctor, which medications to take, and knowing that they will be covered*, over being able to choose among a large number of insurance plans that could decide to change the features I have counted on one month into my year-log commitment. But then, we all know I'm weird.

* One might ask: if a government-run medicare prescription drug plan covered all drugs, how would it manage to control costs? There are a lot of ways to do that other than just not covering drugs. Too many, in fact, to list here. (Requiring newly diagnosed people to try cheaper drugs that work as well as newer, more expensive ones for most people first, for instance. And, of course, letting the government negotiate lower prices. And many, many more.)

Comments

[john miller]

"(His predecessor, Tom Scully, left CMS to become a lobbyist almost immediately after the Medicare bill passed.)"

IIRC, he is now a lobbyist for the pharmaceutical industry.

Coincidence? I think not.

BAsically, you have hit on the major problem, as I mentioned on the other post.

There is a basic guideline: KISS.

The complexities here, meant to favor pharmaceutical and insurance companies, have created a Frankenstein of a situation which, no matter how qualified the people implementing the program, was guaranteed to result in massive problems.

And as has been reported, it is not only the assumed benefactors of the program, the elderly, who have suffered, but also MDs and pharmacies.

My wife is a nurse in a large family practice office, and they are having to rewrite hundreds of prescriptions to drugs that are covered. This is not only time consuming, but also potentially dangerous. Note, BTW, that most drugs that are not covered can be covered, but require that the doctor or his staff spend a lot of time on the phone convincing the insurance company to cover it, usually at a much higher copay.

[Steve]

I am a 100% confirmed liberal but it occurs to me there are two separate storylines being pushed that don't really fit together.

1) The GOP is a bunch of corrupt politicians who need to keep government in its current, bloated state so they can rip off the public through Abramoff-like means.

2) The GOP is a bunch of conservative ideologues who are so fanatical about shrinking government that they're willing to kill off a bunch of old people, New Orleans residents, etc., just to establish that Big Government supposedly doesn't work.

Now, surely some elected Republicans are True Believers, and surely some others are corrupt and simply looking to get rich. But someone at the top is setting the agenda and calling the shots, and I really don't think it's possible they have both of these mutually contradictory goals.

[Charles Bird]

Mark Schmidt is sounding a little paranoid. It's typically simpler and more accurate to ascribe these things to incompetence than conspiracy.

[Barry]

Steve, it can be both - the purpose of government is their power and wealth. All else is to be sacrificed. Either deliberatly, or to maximize their wealth and power, or because they simply don't give a sh*t.

[Barry]

Charles Bird: "Mark Schmidt is sounding a little paranoid. It's typically simpler and more accurate to ascribe these things to incompetence than conspiracy."

Again and again and again, Charles?
How many big things have they screwed up?
How many times have major cronies benefited from these screw-ups?

[cleek]

1) and 2) aren't mutually exclusive because the GOP isn't all one or the other. there are some of each. and then there are probably some who don't mind enriching themselves while persuing their idealogical goals - if they can get rich while taking out Medicare or SS, it's a win-win, for them.

[togolosh]

Managing drug choices could be as simple as setting the premium to zero for generics, with higher premiums for more expensive drugs.

Another thing which could help drive down medical costs is limiting the freebies big pharma hands out to doctors.

[hilzoy]

Charles: I purposely didn't endorse Schmitt's theory, because I don't know if it's true. However, he's not an idiot: he's (imho) one of the most thoughtful political commentators out there, and not given to wild conjectures. He also spent a long time working in the Senate, so he's not completely clueless about who he's talking about.

For my part, I am not given to supposing explicit intentional evil when incompetence is still an option. I incline to the view that the people who drafted this appalling program were concerned mostly with meeting an immediate political need (passing "a Medicare drug bill", no matter whether a good one or a bad one), satisfying their contributors and lobbyist friends, and acting in accordance with various abstract mantras ("markets better than government", no matter in what specific context, or what the details); and that the people in charge of implementing it (e.g., McClellan) are political appointees with neither adequate qualifications nor enough interest in the lives of actual people to try to do it right.

That said, the sheer level of incompetence is enough to make me wonder. And I am not, in general, given to such thoughts.

[Morat]

Well, a bit of key evidence in terms of "This wasn't really meant to help the elderly, but the pharmacuetical companies" comes in the ban on negotiating for bulk discounts.

Medicare is paying a LOT more for a given pill than, say, the VA system.

[cleek]

persuing their idealogical

"...pursuing their ideological...", of course. at least i got the middle word right.

i wonder, does spelling ability begin to decline at 35, or is 35 when you realize you could never spell in the first place ? or should i blame the little wriggly red underlines...

[hilzoy]

cleek: I have given up entirely on ever being able to spell 'weird' correctly -- I long ago got into this 'it's not the way you think it is -- but, oh no, which way is that?' spelling death spiral, and I don't think that anything but spell check will ever let me get it right.

[cleek]

I long ago got into this 'it's not the way you think it is -- but, oh no, which way is that?' spelling death spiral

oh man... so many words do that to me... "weird", "cheif", "desperate", "pursue", etc.. yet another reason i question the intelligence of the designer.

[cleek]

err... "chief". so much for "i before e"

---

the plans can add or drop medications from the list of those they cover each month, while seniors are locked into their plans for a whole year

are there any considerations for new illnesses in these plans? what if you get sick, but the plan you signed-up for 4 months ago doesn't cover the drugs you now need ?

[JP]

I incline to the view that the people who drafted this appalling program were concerned mostly with meeting an immediate political need...

This is probably true of the GOP congressmen who actually physically voted on the law. But Schmitt is right about the Norquists and the Roves who organized the effort behind the scenes and who set out the broader goals of the party. Their own rhetoric shows this to be the case.

[bob mcmanus]

"That said, the sheer level of incompetence is enough to make me wonder. And I am not, in general, given to such thoughts." ...hilzoy

If Katrina, Bush laughing it up with his buds Barbour and Lott, did not convince you, it is hard to imagine what would. And if you, and by the miracles of modern communications, about 50 million more had understood three years ago what kind of people we were dealing with...and Lord knows Paul Krugman was trying to tell us...we might have a different government in place saving lives rather than profiting from death.

And we are still not there by any means. "Good intentions yet incompetent" is still the prevailing explanation. There is no incompetence.

[JP]

Here's Schmitt saying much the same thing regarding Social Security last year. Sorry for the long excerpt, but the whole thing is good.

Now, there is another way that Social Security privatization could create Republicans, and I think this is actually closer to what's on the mind of the less utopian strategists. (That is, those not named "Gingrich" or "Kemp.") It's the negative: they believe Social Security creates Democrats, by fostering a positive sense of government, which in Texas is called "dependence." They don't care about the private accounts so much as eroding as much as possible of the guaranteed benefit....

The positive theory that accounts will make people excited, entrepreneurial, wealth-accumulating owners, and thus Republicans, expresses one idea about human nature. The negative, anti-government theory embodies another: that people, unless desperate, will not rise up to demand what they don't have and have never known. Here it's useful to remember that Karl Rove's historical parallel is the 36 years of Republican dominance from the McKinley election in 1996 to Hoover's defeat. That was a brutal period in American economic life. Government offered nothing in the way of benefits for workers, minimal widows' pensions, no aid for children, monetary policies that were cruel to farmers and regulatory laissez-faire that was cruel to workers. And yet, year in and year out, people took it, without question. It was the natural order of things. Only the greatest economic collapse in our history forced change. People generally don't demand what they don't have. When Social Security is gone, it will not come back, no matter how badly the accounts do. And people will not respond to its absence by becoming Democrats and demanding the restoration of an economic safety net for seniors. Rather, they will forget it ever existed and vote Republican, confirmed in their belief that government doesn't do a damn thing for anyone. There is little doubt in my mind that this is the thought process in "Bush's brain."

[freelunch]

Bob McManus --

I'm fairly well convinced that there is plenty of incompetence. No political organization, no matter how cynical, wants the public to recognize that they really aren't up to the task at hand. The traditionally corrupt political organization made certain to do the little things that mattered to their voting constituents so they could funnel the cash to the corrupt members of whichever organization was really running the show. This group seems unable to understand that eventually voters will hold them responsible for screwing up, so they don't care if they have qualified people running the place or not.

Democrats have to make the next elections about competence and honesty, no matter what the Republicans claim. If they cannot benefit from this and voters are unwilling to see it, then our country deserves to be run like a third-rate military dictatorship that the Bush Administration is trying to emulate.

[hilzoy]

Bob M: where, exactly, did I say anything about good intentions? I differ with Schmitt (sort of, I don't have a really definite view) only in which bad intentions I'm ascribing to them. To my mind, being willing to draft a program without so much as gesturing towards the actual needs of the people it supposedly serves, even when those needs are a matter of life and death, in order to gratify contributors and pay homage to some abstract slogan is plenty bad enough.

[Chris]

It seems to me that at some point, just as is in the case (as I understand it) in criminal law, incompetence can rise to the level of negligence.

The issues that are becoming far too prevalent in the wake of the implementation of this program are simply readily apparent to anyone who has had to take more than one medication at a time. That no one in congress or the administration could forsee them is preposterous. There are too many options with too few commonalities for there to be any way to get a handle on all of the problems that arise.

I have cystic fibrosis and I take a number of prescription drugs. I used to think I took a lot until I read some of the stats regarding the average number of medications taken by "dual eligible" persons. (Those eligible for both Medicaid and now drug coverage under Medicare Part D). I'm currently in the hospital (side note -- high speed wireless in the hospital? priceless.) and lacking anything better to do with my time, I entered all of my medications into the Medicare database and it spit out a list of 45 different plans available in my geographic region. Sounds good. The monthly costs of my drugs through these plans ranged from $255 a month to $17,412 a month. Yes, those are correct. More than seventeen thousand dollars a month difference. Actual numbers from the Medicare site. This was only one of the items to consider...there is also the fact that no plan covered all of the meds that I take and have been taking for years. I'm fairly savy about these things and it took me quite a while to find all of the information. Without the ability to sort through it all, how could someone possibly make a reasonable decision?

The notion that "this is just what happens" is insulting, irresponsible and absurd. It seems that when this administration does something that involves people's lives, it doesn't go as "expected." There's no hiding behind a war on terror or a campaign to bring democracy to a repressed people on this one. To paraphrase from Sportsnight, they've done a big thing badly.

[Debbie(aussie)]

Maybe those that created this little scheme should have looked at others. We in Aus have the PBS (pharmacutical benifits scheme). It works really well. So well in fact that during the free trade talks with the USofA, the americans wanted it wiped out. Thank goodness the goverment refused. Apparently the drug companies hate it. But then the PBS was introduced to help people handle the costs of heathcare not to increase the lining of the pockets of the drug companies.

[DaveC]

Several excellent points have been made, but this:

The GOP is a bunch of conservative ideologues who are so fanatical about shrinking government that they're willing to kill off a bunch of old people, New Orleans residents, etc

is not one of them.

What exactly was the Medicare drug benefit prior to this plan? I am not sure that there was one. So the choice is between a messed up something, and a non-messed up nothing. Hilary has a good point about trying generics first. The fact of the matter is that there is a corrupt relationship between doctors and pharmaceutial reps, as well as between the big govt and big business, and hospitals ordering every test under the sun when a new Medicare patient is admitted, so that they can pay for unreimbursed services. Now, I personally believe that there should be a big govt insurance pool to cover catastrophic illneses and injuries (which we don't have), and that there should be some other thing to pay for old folks who are deemed uninsurable. But for the majority of folks, not desperately poor people but working adults, they should be able and willing to pay some out of pocket expenses. That would ensure more realistic prices thru competition, like generic drugs. As awful as this sounds, I think that doctors should offer discounts for cash payments.

[liberal japonicus]

DaveC
email Jackmormon about HoCB. Your future blogging audience awaits!!

[Jackmormon]

We're on top of the situation. Now DaveC needs to confirm that everything worked by posting on HoCB

[liberal japonicus]

That deserves a japanese smiley

\(^_^)/

(banzai!)

[Jesurgislac]

DaveC: What exactly was the Medicare drug benefit prior to this plan? I am not sure that there was one.

You don't consider it a "benefit" that people were able to get the drugs they needed to stay alive or just to live?

Well, evidently not. Do you define a "drug benefit" as one that's profitable for someone, and therefore the old Medicare had no "drug benefit" because you feel it wasn't profitable, or wasn't profitable enough?

Hint: the purpose of a health care plan is, in most users minds, to keep them healthy - or as well as possible. It's the insurance companies who define "drug benefit" as "drug profit", not the patients.

[debbie(aussie)]

this seems to prove that profits are more important than anything else. it does make one wonder about conspiracy theories though. are they trying to get rid of the old and poor?

[Duane]

cleek:

I too was utterly incapable of spelling desparate until someone recently told me the way to remember it is that, "desparate has a rat in it". I am still reveling in my new found power.

Totally OT, but I just had to share.

[Phil]

It seems to me that Jesurgislac's 3:49AM is a textbook exercise in missing the point. It doesn't even come remotely close to answering DaveC's question, which once again was "What was the Medicare prescription drug benefit prior to this plan?"

Jes, did you actually have an answer concerning whether and how US prescription drugs were covered under Medicare prior to this plan?

[Nell]

Duane, I think you might have misunderstood the mnemonic; the 'has a rat in it' might have been intended to warn you off that misspelling.

The 'no hope' word is spelled desperate.

There is a similar word with a rat in it, disparate (differing).

[Nell]

Stop the italics madness....

[Jesurgislac]

Phil: Jes, did you actually have an answer concerning whether and how US prescription drugs were covered under Medicare prior to this plan?

I may have misunderstood the situation, Phil. If the situation prior to this bill was that no one on Medicare could get any prescription drugs at all, then being able to get some, albeit in a complicated and expensive manner, would be an improvement. However, I have to admit that coming as I do from a country where everyone over sixty gets prescription drugs for no charge (as does everyone under 16, or under 18 if in full-time education, or anyone pregnant or who's had a baby within the past year, or anyone with certain medical conditions (listed) or anyone on a very low income) it simply didn't occur to me that being on Medicare meant, absent other health insurance, you had to pay full price for any and all drugs you might need. But, if that was the case, then DaveC's question made sense, and my answer didn't.

[Nell]

Phil, Jes, others: I was googling a few days ago to try to answer this question myself, and the closest thing I found was an analysis of some DLC types at the time:

A Better Drug Benefit

It doesn't make clear whether there was any drug benefit before the bill (I think there was not), but it does make clear that many of the problems were foreseen and have more to do with design than implementation.

[hilzoy]

To DaveC's question about previous drug benefits: Medicare didn't have one. However, all those who were eligible for both Medicare and Medicaid (the 'dual eligibles') had prescription drugs covered under Medicaid, and have now been enrolled, at random, in one of the Medicare Part D plans.

[Duane]

D'oh! Now that is truly embarrassing, I've been sure I finally had it right! Thanks, Nell.

[Bruce Baugh]

I have here a 1999 study by AARP on prescription drug costs and paying for them, which seems pretty clearly done. (AARP's basic research usually is good. It's their advocacy that gets weird sometimes.)

As of that date, they found that about two-thirds of Medicare recipients had some help with prescription costs, generally through supplemental insurance. Out of pocket spending was an average of $590 per year for those without such coverage, $320 per year for those with it. Stand-alone prescription help came with high deductibles - as much as $250, they say! - and caps, so that while any relief was better than none, sometimes it wasn't that much better in practical terms. The study notes that the general decline in employer-provided coverage was leaving more folks with weak or no coverage in this area, which is a big part of why they were pressing for an expansion of Medicare. There are a lot more details in the report, but that's the upshot of it.

In general, the reading I find - search tip: throw in a year before 2003 along with things like "medicare" "prescription drugs" - suggests that what was needed was a very simple policy of covering all of prescription drug costs up to some good threshold, with collective bargaining for best rates, and coverage beyond that for severe conditions. No fuss, no muss, the sort of thing big insurance policies used to do all the time. Of course that would have been putting customers' needs first, so not much chance.

[Anarch]

There is definitely something Norquistian about the whole thing, I must admit...

[Jesurgislac]

Hilzoy and others: thanks for clearing that up. I goofed.

[Jennica]

my name is jennica and I just want to say thank you, this website really helped me with my school project on medicare and medicaid. Thanks much!!! Jennica

Parkview High School
class of 2009