Congress, the Elderly and the Future of Health Care

Date: 24 Oct 1995 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

Congress, the Elderly and the Future of Health Care

by David Morris

October 24, 1995

They almost got away with it. Last year’s defeat of the Democratic health care plan taught the Republicans the risks of allowing the public time to digest and debate government proposals. This year the GOP decided to avoid this messy exercise in democracy. They waited until the final days of the Congressional session. And then they ambushed the citizenry with radical Medicare and Medicaid proposals. They refused to hold hearings and tried to go directly to a vote.

They almost got away with it. But the process bogged down. The public gained the time to read their proposals. And the more the public read, the angrier they’ve become.

Let’s start with the basics. Every ten years or so Medicare is declared insolvent. That is a signal for Congress to make the proper adjustments. For example, in 1982 Reagan’s Medicare Trustees predicted the system would go bankrupt in five years. Congress made modest changes. No crisis occurred.

Clinton’s Medicare Trustees contend the system needs another repair. By cutting costs or increasing premiums by $89 billion, they conclude, Medicare will remain solvent through the year 2006. Republicans, on the other hand, propose to slash the Medicare budget by $270 billion. Most of these savings will not be used to help the health care system. Therefore the Republican cuts will extend Medicare’s solvency only a couple of years longer than the Democrats’ proposal.

The changes the Republicans propose won’t save Medicare. But they may devastate the elderly, especially those on the lower end of the income scale. Indeed, as with most Republican policies, this one nurtures the wealthier and more powerful and starves the poorer and weaker. For example, Republicans propose to overturn the 1993 law that requires wealthier seniors to pay taxes on 85 percent of their social security benefits. This revenue is earmarked for the Hospital Insurance Trust Fund. Eliminating that tax will put a $47 billion hole in the Medicare account.

Republicans will make up for this revenue loss by forcing the elderly to pay another $300-500 per year for health coverage. About 75 percent of those on Medicare have incomes below $25,000 a year. One quarter of the elderly have incomes of less than $7,000 a year.

Republicans also propose to raise the eligibility age for Medicare from 65 to 67. Four million older Americans will lose their Medicare privileges as a result. For some groups the impact will be profound. The life expectancy of black men is about 65 years. Thus the average African American male will be paying into a fund he will never use.

Public attention so far has focused on the rise in premiums. But it may be the fine print of the Republican bill that inflicts the most damage.

The House proposal will allow doctors to refer Medicare patients to companies in which the doctors have a financial interest. This practice of self-dealing is now forbidden, for good reason. It invites fraud. According to the Congressional Budget Office, the cost of unnecessary tests and procedures resulting from this change may reach $400 million.

While House Republicans invite fraud, they propose to curb the Inspector General’s ability to investigate fraud, even though by some estimates the Medicare system could save $40-60 billion simply by rigorously enforcing existing laws against fraud and abuse.

The list of horrors goes on. Forget about holding drug companies and doctors responsible for their misconduct. Republicans will prohibit punitive damages in lawsuits involving drugs and medical devices approved by the Food and Drug Administration, even if the company engages in willful misconduct. Republicans will limit jury awards for pain and suffering from medical malpractice.

House Republicans propose to eliminate almost all federal regulation of medical laboratories in doctors’ offices. Keep in mind that these regulations were only recently adopted in response to widespread abuses that prompted public outrage. In 1988 Congress heard chilling accounts of death and suffering caused by inaccurate medical tests.

Their proposals expose the Republicans’ hypocritical attitude toward state rights. About 30 states have laws prohibiting self-dealing by doctors. These would be overturned. States require insurers and other operators of HMOs to set aside hundreds of millions of dollars in reserve funds to protect consumers in the event of HMO bankruptcies. House Republicans would exempt managed care plans set up by doctors from these state regulations.

And then there is their most radical proposal of all, the Medical Savings Account, a dagger pointed at the heart of Medicare. Younger, healthier seniors will be able to establish medical savings accounts with their Medicare money and pocket any savings that may result from their using fewer medical services. Meanwhile, older, sicker seniors will stay in the Medicare system and have to make up the lost income by paying higher premiums. By some estimates the Medical savings accounts could cost Medicare more than $2 billion.

All in all, the Republican health care plan is a case of ideology run amuck. Now, with the Gingrich Express slowed, there’s still time to let Congress know what we think. There’s still time to demand that Republicans do it the right way. Introduce their health care plan in January, hold public hearings, engage in public debate and make a decision in the full glare of publicity during an election year. For better or for worse, that’s the democratic way. Isn’t it?

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.