March 17, 1999

March 17, 1999 | News Releases on Social Security

Politics Derails Real Medicare Reform, Analyst Says

WASHINGTON, MARCH 17, 1999-The bipartisan commission on fixing Medicare failed to approve the reform plan put forward by Chairman Sen. John Breaux, D-La., "squandering an extraordinary opportunity to secure health benefits for today's seniors and for future generations of retirees," says a spokesman for The Heritage Foundation.

The commission, an outgrowth of the 1997 Balanced Budget Act passed by Congress and signed by the president, voted 10-7 yesterday against the Breaux plan. All of President Clinton's appointees voted against it.

"The Breaux approach failed for one reason only-lack of support from the White House," says Robert Moffit, director of domestic policy studies at The Heritage Foundation. "President Clinton proved he's not serious about real Medicare reform."

The Breaux proposal would change Medicare from a defined benefit plan, where the government directly pays for an approved list of medical benefits, to a system of "premium support," where senior citizens would be given the financial means to purchase the health coverage of their choice. It is modeled after the Federal Employees Health Benefits Program, which covers members of Congress, the White House staff, and nearly 10 million other federal employees and their dependents.

"If a system of patient choice and superior private plans is good enough for Congress and the White House," Moffit says, "it should be good enough for America's seniors."

The Heritage Foundation has advocated reforming Medicare on the positive experience of the FEHBP since 1994, and has recommended an FEHBP-style reform of the broader health-care system since 1989. Heritage analysts say consumer choice and market competition, not government regulations, should be used to control costs and broaden the range of services offered to America's seniors. This approach has support from both aides of the aisle in Congress and from health care experts across the political spectrum.

Rather than embrace the Medicare reform proposed by Breaux and supported by fellow commission member Sen. Bob Kerrey, D-Neb., President Clinton has proposed earmarking 15 percent of projected budget surpluses to the Medicare "trust fund." This approach has come under fire from government accountants at the General Accounting Office and the Congressional Budget Office, who note-correctly in Moffit's view-that pouring money into the trust fund is merely a paper transaction that does nothing to solve Medicare's structural problems.

"Simply throwing money at Medicare makes the job of real reformers even harder," Moffit says.

Even though his reform plan failed in the commission, Breaux has vowed to offer it as legislation this year-a move Moffit applauded. "The positive results of the FEHBP can be achieved for Medicare, and that option needs to be debated before the public," he says. "Seniors especially need to know about a superior health care system that their elected representatives have but they are denied."

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