Gov. George W. Bush announced Sept. 5 that he intends to push seniors out of traditional Medicare and into health maintenance organizations. Those weren’t his exact words, but that is an exact description of his intentions.
Bill Clinton proposed to do the same thing to the nonelderly with his 1993 health care “reform” bill, namely, push them out of their traditional fee-for-service insurance plans and into HMOs. It is difficult to understand why Clinton endorsed such a politically dangerous proposal in 1993, and it is downright impossible to understand why Bush is doing so in 2000. When Clinton endorsed HMOs in 1993, the nation had yet to be convulsed by the “HMO backlash” (which began in 1996) and by the abandonment of more than a million seniors by HMOs (which began in 1998).
The explanation that makes the most sense to me is that Bush, like Clinton before him, had no expertise in health policy and was misled by advisers and HMO propaganda. Bush is apparently one of the few Americans left who thinks HMOs are efficient and patient-friendly, and that the HMO backlash is, as the HMO industry insists, just a few horror stories blown out of proportion by the media.
Bush offered few details about his Medicare plan, but he did say it is based on a bill introduced by Senators John Breaux (D-LA) and Bill Frist (R-TN). The Breaux-Frist bill assumes that HMOs, which tell doctors how to practice medicine, are more efficient than old-fashioned fee-for-service insurance programs (such as the traditional Medicare program) which do not interfere in the doctor-patient relationship.
It is true that HMO premiums are usually lower than those of traditional insurers, but that is not proof of efficiency. A substantial body of evidence indicates HMO premiums are below those of traditional insurers because they enroll healthier people and because HMOs use their influence over doctors to ration care more aggressively than do traditional insurers. Cherry-picking the healthy and denying care to the sick is not being “efficient.”
The Bush proposal would give seniors vouchers that are just high enough to buy an HMO policy but not high enough to stay in the traditional Medicare program where doctors are allowed to practice medicine without interference from HMO bureaucrats. While still sketchy, the Breaux-Frist bill does give us enough information to make a reasonably accurate estimate regarding HMO and Medicare premiums.
HMOs, with their cherry-picking and rationing advantages, will set their premiums at about $5,300, while Medicare will set the premium for the traditional Medicare program at roughly $6,000. Under the Breaux-Frist-Bush proposal, seniors will get a voucher for roughly $5,300. If seniors want to cough up another $700 from their own bank accounts, they are free to stay in the traditional Medicare program. But if they cannot afford to do that, they will have no choice other than to leave that program and enroll in an HMO.
The Bush proposal will set off what actuaries call a “death spiral” that will eventually cripple or destroy the traditional Medicare program. Here’s how. In disproportionate numbers, healthy seniors will decide that it is not worth the extra $700 to stay in Medicare and will enroll in HMOs. This will occur for two reasons: Healthy seniors will be more willing to run the risk of not being able to see their own doctor and of being denied care than sick seniors will be, and HMO advertising tends to be aimed at attracting healthier seniors. As healthy seniors enroll in HMOs, traditional Medicare will get stuck with less healthy seniors and will have to raise its premiums.
That in turn will drive even more seniors (the healthier ones) into the arms of the HMOs, and around the vicious cycle will go.
To date, the media and Vice President Al Gore have failed to notify the public that Bush’s proposal was deliberately designed to push seniors into HMOs. Bush is claiming that his Medicare proposal will “give seniors choice,” but seniors never clamored for “choice” of insurer. They, like all of us under 65, want choice of doctor. Choice of doctor is what the current Medicare program guarantees. Choice of doctor is what Bush’s Medicare proposal would take away.
Kip Sullivan is a member of the steering committee of the Health Care Campaign of Minnesota, a coalition promoting a universal health insurance program. Send letters to the editor to [email protected]