Promises, promises

May 1, 2001

When it comes to health care, Americans act like adolescents.

 

Washington Insight

Promises, promises

By Julie Rovner, Contributing Editor

It's been said that when it comes to health care, Americans act like adolescents: They want everything modern medicine has to offer (and some things modern medicine has yet to offer), and they want someone else to pay for it.

Judging from the opening months of the George W. Bush administration and the 107th Congress, it seems official Washington is acting even younger—more like the 8 year-old at the carnival whose eyes are bigger than his stomach.

Even as the economy wobbles, Washington is in the midst of "surplus fever." Visions of trillions of extra dollars dance in the heads of both Republicans and Democrats, who dream of tax cuts at the same time they provide monetary answers to some of the peskiest—and most expensive—problems plaguing the nation. And health care is at the top of the list.

Lawmakers of both parties have spent the past few months promising to add a new outpatient prescription drug benefit to Medicare, help aging baby boomers pay for long-term care and help the uninsured. But in recent weeks it's begun to dawn that even without providing a huge tax cut they can't address all three health problems—not, at least, in any meaningful way. But many persist in promising voters they intend to deliver.

An early dose of reality came in March, when the head of the Congressional Budget Office warned the Senate Finance Committee that adding prescription drug coverage to Medicare could be much more expensive than previously thought. CBO Director Dan Crippen testified that while the details of any proposed benefit obviously will affect its final cost, Medicare beneficiaries are expected to consume $1.5 trillion worth of prescription drugs over the next decade. Thus, a benefit that covers only half those costs would total more than $700 billion.

Taking those figures into account, the Senate on April 3 voted to double President Bush's proposed $153 billion budget for Medicare reform and a drug benefit. The $153 billion, Crippen told the committee, "would provide a pretty thin universal benefit."

But it's not clear that $300 billion will go much further. The problem, Urban Institute President Robert Reischauer told the Senate Budget Committee, is that that amount, which would include substantial premiums, deductibles and copayments—and offer far less generous coverage than that of most of the insured working population—would likely not be "politically sustainable" over the long run. "As soon as one of these plans was enacted, pressure would begin to mount to liberalize the benefit and make it more like the ones enjoyed by workers," he said.

The numbers for long-term care coverage are even more frightening. This time the bad news, also delivered to the Finance Committee, came just five days later from the General Accounting Office. According to GAO's Bill Scanlon, by 2020 the percentage of elderly in the population will rise by a third, to 16.5 percent. More ominous is that the number of "old-old" people, those over age 85—who are most likely to require long-term care services—will triple to 14 million people by 2040. Yet now, in preparation for their old age, "less than 10 percent of the elderly and an even lower percentage of the near-elderly have bought long-term care insurance," Scanlon told the committee.

True, lawmakers and President Bush are proposing to address the long-term care problem, but only in the most incremental of ways. President Bush wants to devote $15.8 billion of his $1.6 trillion tax cut to encouraging people to purchase long-term care insurance. A bipartisan group of House members and Senators also have a bill, which would make it easier to deduct the cost of private long-term care insurance and provide a credit of up to $3,000 for those who directly pay for or provide care. But with the cost of nursing home care already topping $50,000 per year, it's hard to see how much of a dent $3,000 will make.

Similarly, efforts to help the uninsured appear unlikely to do more than nibble around the edges of the problem. President Bush wants to provide tax credits of up to $1,000 for individuals and $2,500 for families, at a 10-year cost of more than $70 billion. But it is by no means clear whether policies that inexpensive will actually protect people from health care costs; one $2,600-per-year policy in Alabama would have an annual deductible of $15,000. And most analysts say $2,500 is unlikely to be enough help to entice a family with a $30,000 income and two kids to buy a more meaningful policy likely to cost $5,000 or $6,000.

During its consideration of the budget resolution in April, the Senate did quietly approve an amendment to provide $28 billion over three years to help expand public programs, such as Medicaid and the State Children's Health Insurance Program. Many analysts have suggested that combining expansions of existing programs for those with low incomes and tax credits for those better off might just make a difference, if not actually solve the problem.

But it's clear that while big health issues are on the agenda in Washington, no one is facing up to what addressing them might actually cost.

 

Julie Rovner. Promises, promises. Business and Health 2001;5:10.