Medi-SCARE

NEA Today, Mar 2004 by O'Neil, John

The newly passed Medicare law is bad medicine, with provisions that will erode traditional health insurance for active employees and undermine the safety net Medicare provides for retirees. And that's just for starters.

You're getting squeezed-and everyone knows it. Health care premiums are swallowing larger and larger chunks of the compensation pie at the bargaining table. Teachers and ESPs foot a bigger share of the prescription drug bill at the pharmacy. And retired members' pension checks get lighter each year as premiums and out-of-pocket costs go through the roof.

It's no wonder Congress last year turned its eye to health care. Promising a revamped Medicare program, lawmakers seemed poised to bring much-needed relief from rising drug costs and gap-riddled health insurance coverage.

Instead, NEA experts and other analysts say, provisions in the Medicare law signed by President Bush in December, once in place, could have Active and Retired members alike reaching for the aspirin-or something stronger. In addition to privatizing Medicare and gifting $12 billion in subsidies to private insurers to enable them to "compete" with government-run Medicare, Congress slipped in a provision for new tax breaks that experts say could cause the premiums for traditional comprehensive health insurance to soar.

The Medicare Prescription Drug and Modernization Act's 678 pages stray so far from the original goal of helping seniors with high drug costs that some irate Retired members say it's No Child Left Behind all over again-a lofty plan, bound to wreak havoc as the fine print of the law spins itself out.

"NEA lobbied very hard for a strong Medicare bill, but we wound up opposing passage of the present law because we feel it will do more harm than good," says NEA's Lynn Ohman, citing the provisions to privatize Medicare and the inclusion of tax-free Health Savings Accounts (HSAs) as particularly dangerous. "The law takes government assistance with health care costs in the wrong direction."

The Medicare law's passage rankles all the more because the bill was held hostage to politics, with many analysts contending that President Bush and congressional leaders were determined to push through a bill-no matter how flawed-before the 2004 elections. They got a big boost when the AARP swung its support to the bill in a highly controversial endorsement that upset many of its 35 million members. Even with AARP's endorsement the Medicare bill was dead in the House of Representatives until-in a bitterly contested move-Republican leaders dragged out a roll call vote for close to three hours in the middle of the night before convincing two of their party to switch votes.

TRADITIONAL PLANS ERODING

Nobody is more irked by the deal Congress cut than teachers and ESPs, who deal every day with skyrocketing drug costs and gaps in health insurance.

Take Billings, Montana, elementary teacher Man Audet. "When I started teaching 12 years ago, my insurance was 100-percent paid [by the school district] for my entire family," says Audet, currently president of the Billings Education Association (BEA). "And we had great pharmacy benefits-you paid $7 for every prescription."

But those days are long gone. Health insurance for BEA members who elect a plan offering family coverage with a $500 deductible has climbed to $782 a month, of which the district pays only $300. Premiums have gone up steadily by 10-15 percent a year, Audet says, but jumped by 40 percent one year. The latest danger: health care costs are rising so much that some BEA members have hit the $1 million lifetime benefit maximum on their policies due to a serious illness.

Even so, Audet says Billings employees have better insurance than many other Montanans. "Some of Montana's small towns are paying premiums that are twice what we pay now," he says.

The seriousness of the health insurance crisis in Billings and across the country (see "Vital Signs") explains why experts are so concerned the new Medicare law will worsen existing problems.

Among the problems in the law:

NO CONTROLS on runaway drug costs. In negotiating the Medicare bill's provision for prescription drug coverage for seniors, Congress had the opportunity to use the leverage of 40 million Medicare beneficiaries to negotiate lower prices from drug manufacturers. Since rising drug prices are one of the chief drivers of overall health care cost increases, price controls would have helped both Active and Retired members keep expenses down. Instead, in the face of fierce lobbying by the drug industry, the new law specifically forbade the federal government from negotiating with suppliers to rein in drug costs. Congressional negotiators also declined to include a provision that would have made it easier to reimport drugs from Canada (which has been used as a stop-gap measure to bring cheaper drugs to U.S. citizens). No wonder Larry Koenck, a Retired member of Education Minnesota, called the new Medicare law "a blank check for drug companies to rip off the American consumer."