July 28th, 2008
Medicare vs. Medicare Advantage in the House of Wax
One thing the recent veto override on health care showed is that there is a fight shaping up between traditional Medicare and Medicare Advantage, a program with support for prescription drugs implemented in this decade.
Medicare is run by the government. Medicare Advantage is run by private businesses.
Democrats are targeting the profits of those businesses, arguing for cost controls, which Republicans are arguing means big government.
The Democrats’ plan is to pit industries against one another, to divide and conquer.
While the Medicare vote was pitched as pitting insurers against doctors, drug companies were even bigger beneficiaries of the system whose interests lost.
That’s because Medicare Part D failed to centralize price negotiations. Democrats call this a $3.7 billion windfall, which they’re now aiming at more directly.
A Democratic report from the House of Wax, the Oversight and Government Reform Committee chaired by Democrat Henry Waxman of California (above) illustrates how the argument works.
The report focuses on “dual eligibles,” people whose financial condition and age make them eligible for coverage under either Medicare or Medicaid.
Those who switched to Medicare Part D, the drug coverage run by insurers as Medicare Advantage, cost the government 30% more, Waxman’s report says.
This “divide and conquer” strategy worked in the previous debate, and the aim this time is to demand central negotiations from drug companies, which would lower prices.
Republicans, who lost the last round, reject Waxman’s criticism, with industry lobbyists calling the present system a “competitive, market-based structure.”
Sound rhetoric, but can rhetoric win?
So the stage is set. Reformers will talk about “greed” among those who have benefitted from the Bush Administration’s privatization efforts. Industry will claim government can’t do anything right, and thus all imagined savings are illusory.
It’s a push right now, but the balance of forces will change after November, and we already see how Democrats are going to play their hand.
Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994. See his full profile and disclosure of his industry affiliations.
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| 07/28/08
