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PNHP RESOURCES

Statement of Dr. Quentin Young on the Republican Conference Report on Medicare

November, 1995

"The Republican proposals on Medicare and Medicaid reported out of Conference Committee late last week would abruptly destroy these vital programs which provide the only health care safety net for more than 60 million Americans. The GOP proposals are a tax-financed windfall to private insurers/HMOs, who will be allowed to raid the programs, reaping enormous profits at public expense."

"For-profit HMOs will target the healthiest seniors for enrollment, leaving sicker patients in traditional Medicare. In an average year, 19% of Medicare enrollees cost the program nothing and 53% cost less than $500 each -- equivalent to just one month's premium in a Boston Medicare HMO. Medical savings accounts will attract only the healthiest and wealthiest seniors, further shrinking the funds available to care for the frail elderly by costing Medicare dollars that otherwise would not have been spent. While private plans cash in on healthy seniors who don't use their services, traditional Medicare will be underfunded and sick seniors will languish without adequate care."

"Moreover, as provider reimbursement is ratcheted down to meet GOP budgetary "triggers," fewer providers will take Medicare patients, leaving the traditional Medicare program looking more like Medicaid, with benefits that exist on paper but not in the doctor's office. This should be a wake up call to America's seniors and their children -- as Medicare is gutted, access to health care for the elderly will be little better than for those without any health insurance at all."

"Proponents of managed care believe the market can increase efficiencies in Medicaid and Medicare. Yet according to HCFA-commissioned studies, Medicare HMOs cost the government nearly six percent more per patient than traditional Medicare because of cherry-picking. They have also denied Medicare patients needed home care. Several Florida Medicaid HMOs spent more than half of their Medicaid dollars on their administrative costs and lavish profits. Moreover, contrary to earlier reports, managed care has saved little money in the private sector: the consulting firm Foster Higgins found that per-employee HMO costs increased 9.7% in 1994 for large employers."

"The GOP's cuts guarantee a dramatic increase in the number of Americans without health insurance. Between 1989 and 1993, Medicaid enrollment increased by 10.5 million, and the ranks of the uninsured still grew by 6.3 million. According to a study for the Robert Wood Johnson Foundation, cutting Medicaid by $170 billion will increase the number of uninsured from about 40 million now to over 65 million by 2002."

In addition:

The proposal will expose seniors to the same kinds of massive fraud and abuse rife within Medicaid HMOs, the Medigap sector, and managed mental heath care. In Florida, Medicaid patients were told by HMOs that they would lose their coverage if they didn't enroll. In Tennessee, Medicaid HMOs padded their rolls with prisoners and non-existent homeless people, illegally collecting premiums from the state. New York's auditors found inadequate access to care in most of that state's Medicaid HMOs. In Ohio, most of the $14 million paid to Biodyne for managed mental health care for state employees went for profits and overhead.

The GOP Medicare proposal is a windfall to entrepreneurial physicians, providing an anti trust exemption for physician-owned HMOs, and repealing restrictions on self-referrals to physician-owned labs and other health facilities. These measures, shamelessly endorsed by the AMA, pit physicians directly against patients in a battle for the dollar.

At the same time Republicans are recklessly slashing Medicaid funding and turning the program over to the states, they are proscribing state oversight of health care quality. For example, Rhode Island, which has prohibited financial incentives for providers to deny care, and New Jersey, which is moving in that direction, would be prohibited from regulating Medicare HMOs.

The proposal would lower federal standards for nursing homes which addressed earlier scandals. Medicaid is by far the largest payer for nursing home care, and in most states the federal Medicaid rules are the only nursing home standards. The rules have halved the number of people who are tied down, greatly reduced the sedation of non-psychotic patients, and set decent standards for staff training. Even so, this summer's inspections of nursing homes found two-thirds were not in "substantial compliance," and 18% were providing substandard care.

"The Republican proposal will accelerate the denial of health care to millions more Americans and divert billions of health care dollars from clinical care into corporate profits. We need to expand Medicare to everyone, not destroy a successful program. The only way to control costs while improving access, quality, and preserving choice of doctor is a single-payer system covering all Americans."