At the turn of the 18th century, Rep. John Randolph of Virginia said of Rep. Edward Livingston of New York, "Like rotten mackerel by moonlight, he shines and stinks." That's a good description of the new Medicare bill.
There are parts that do shine; it would be hard to spend almost $400 billion without getting some good improvements. The low-income provisions clearly are the bright spot. There is help for most of those not eligible for Medicaid who are under 135% of the poverty level ($12,123 for an individual). There is added help for those between 135% and 150% of the poverty level (or up to $13,470 for an individual). But even there, the conference committee scaled back the Senate's initial excellent provisions, cutting off help for roughly 3.8 million low-income beneficiaries by adding a restrictive asset test and reducing eligibility for those at 160% of the poverty level.
The tragedy of the law is that so much of our national treasure is being spent so inefficiently. It throws billions of dollars at HMOs and PPOs while still not providing a good insurance benefit. This limitation guaranteed that the benefit would have a considerable gap in coverage-the "doughnut hole"-that will so disappoint and enrage millions of seniors and people with disabilities. Many members of Congress voted for the bill saying that the $395 billion would probably not be available in future years and that this amount should be seized before it is lost to future wars, tax cuts and higher deficit interest payments. They are probably right. But the $395 billion also could have gone twice as far if Congress had employed the aggressive purchasing power that the Veterans Affairs Department healthcare system and most foreign governments use to get good drug prices.
Effective cost containment should be used to fix the new law. Because of the legislation's utter failure to moderate skyrocketing prescription drug prices, the amount many seniors will have to pay out of pocket will roughly double every seven years. The immediate task for Congress is to ensure that we achieve cost containment that actually encourages more research on breakthrough drugs.
Other fixes, particularly for the poorest seniors and people with disabilities, are needed as well. First, repeal the asset test. Second, provide meaningful help for those under 200% of the poverty level by extending low-income help and creating a more progressive transition from low-income assistance to the standard benefit. For example, under the current law, seniors whose incomes are just one dollar above $13,470 (150% of the poverty level) will get no low-income assistance. This benefit structure will discourage employment and savings.
Finally, fix the doughnut hole, which otherwise will leave millions of seniors without drug coverage for a substantial period of time.
Bill Vaughan is director of government affairs for Families USA, Washington.