December 13, 2000

December 13, 2000 | News Releases on Health Care

Next President Should Advance "Fresh Approach" To Health Insurance And Medicare Reforms, Analysts Say

WASHINGTON, Dec. 13, 2000--America's next president can-and should-make fundamental health-care reform a top priority, according to excerpts from the forthcoming book "Priorities for the President," released today by The Heritage Foundation.

"The dust kicked up by all the post-election legal wrangling and partisan sniping during 2000 cannot obscure the fact that the political stage is already set for the new president and the new Congress to create a far superior health-care system for both working Americans and retirees," said Stuart Butler, Heritage's vice president for domestic and economic policy studies.

"Broad, bipartisan consensus about how to approach this issue already exists on Capitol Hill, and public demand for action has never been stronger," he added, citing a Zogby/Reuters poll, released Monday, that shows health-care reform finishing a close second to "establishing bipartisan cooperation" on the public's list of leading priorities for the next president.

The first of two Heritage "Priorities" chapters released today-"Solving the Health Insurance Problem for Working Americans"-notes that many Americans fear medical expenses could bankrupt them or force them to go without necessary care. Many workers with employer-based health coverage "want relief from bureaucratic obstacles imposed by their plans and restrictions on access to care, and they want assurances that, if they lose their jobs, they will not lose their coverage."

This can be done by empowering patients-expanding their options for coverage and giving them ownership of their insurance policies, say authors Butler and Grace-Marie Arnett, president of the Galen Institute, a Washington-based health research group.

"If employees were able to choose their health insurance plan with the same freedom they enjoy in choosing insurance for their house or their car-or that federal workers enjoy in choosing their health coverage in the Federal Employees Health Benefits Program, enacting cumbersome legal and regulatory requirements such as a Patients' Bill of Rights … would be unnecessary," they write.

What is necessary, they maintain, is a bipartisan initiative that stresses:

  • Tax fairness, including a tax credit to purchase insurance for those without employer-sponsored coverage;
  • Alternatives to employer-based coverage, such as plans sponsored by churches, associations, unions and other groups that offer their members a wide range of health plans;
  • Protection of existing coverage to ensure that those secure in their current coverage won't feel threatened by the incentives created for those excluded by the employer-based system; and
  • Financial help for those who need it most, using part of the federal budget surplus intelligently in pursuit of this top-priority goal.

But the reforms should also extend to the problems with Medicare. In the chapter "Improving and Preserving Medicare for Tomorrow's Seniors," Heritage Director of Domestic Policy Studies Robert Moffit argues that the time is ripe for reform of the $220 billion program due to a confluence of three critical factors: rising dissatisfaction with the current, regulation-bound system; increasing political will to address the system's untenable financial situation, and growing consensus about the direction in which reform efforts should proceed.

Fundamental reform can be achieved, Moffit writes, if the next president commits his time and political capital to educating people on Medicare's "financial and governance crises" and building on the reform proposals laid out last year by a majority on the National Bipartisan Commission on the Future of Medicare.

The commission, chaired by Sen. John Breaux, D-La., and Rep. William Thomas, R-Calif., marked the first time that a bipartisan majority of public officials urged a major structural change in the system-one based on patient choice and market competition.

The commission report recommended remodeling Medicare in the image of the popular Federal Employees Health Benefits Program, the 40-year-old health plan covering members of Congress and 9 million federal employees, retirees and their dependents. The president should "use this proposal as the starting point … and improve on its recommendations," Moffit writes. Specifically, the reform package should offer retirees:

  • A wide choice of health plans and benefits, ranging from traditional Medicare to various private insurance plans, each offering at least a minimum package of "core benefits."
  • Government "premium support financing" that covers the cost of the core benefits package.
  • Universal prescription-drug coverage, with premium subsidies for low-income retirees.
  • A new administrative agency to set and enforce the ground rules for private plans participating in the program-with minimal regulation.

The political will to reform Medicare is strong and growing, Moffit observes, fueled largely by congressional concerns over the program's long-term financial viability and rising "dissatisfaction with the performance of the Medicare bureaucracy," the Health Care Financing Administration (HCFA).

Repeated warnings from the GAO, and from the Medicare Trustees, that the program cannot survive another generation in its present form have created a sense of urgency about the need to address the situation, Moffit argues.

Still, he acknowledges that not everyone will jump aboard the reform bandwagon. Fierce resistance will come from "a whole industry of accountants, consultants, 'coding' experts and lawyers … deriving a lucrative income from advising doctors and hospitals on Medicare's voluminous rules, regulations, guidelines and complicated payment schemes." And some office holders "can be expected to exploit the fears of vulnerable senior citizens for political gain."

To combat these forces, Moffit says, the president must enlist the support of leaders from both parties and use his "bully pulpit," high-profile congressional hearings, and grassroots forums sponsored by doctors and hospitals to educate the public about the extent of the Medicare crisis and the need for true reform.

To neutralize the demagogues, he advises leaving Medicare untouched as far as treatment of today's retirees is concerned. "The Medicare debate is not about the present; it is about the future," he argues. The president "can circumvent politics by separating his proposals from the congressional budget process and by removing the current Medicare recipients from the debate, focusing instead on future generations of retirees."

Moffit cites Britain's overhaul of its Social Security program as just one example of how major social and economic reforms have been implemented by "grandfathering-in" existing beneficiaries while implementing a new approach that offered younger generations a better deal.

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