Voucher Proposal Wrong Prescription for Medicare

Study Blasts Medicare Commission's Pro-HMO Recommendations Calls for Universal System to Include Young and Old

San Francisco -- Seniors, beware. That's the conclusion of an advance study of the National Medicare Commission's recommendations due out next month. The Commission is expected to propose raising the eligibility age for seniors to 67 and replacing the existing program with a voucher program.

"This is absolutely the wrong prescription for Medicare," said the study's lead author, Dr. Thomas Bodenheimer, a Professor of Family Medicine at UC San Francisco and a founder of the California Physicians Alliance (CaPA). "Giving seniors coupons to try to buy private insurance is a prescription for massive confusion, fraud and abuse. Just a few months ago over 400,000 seniors were dumped from private insurers. This is a proposal to funnel billions of taxpayer dollars into the coffers of HMOs, not protect health care for seniors."

The voucher proposal, or "premium support" plan as it is referred to by the commission, would increase out-of-pocket costs for the elderly, who already spend more than 20% of their incomes on health care, according to the study. The explanation is that the value of the vouchers falls over time, as health care costs rise faster than the value of the coupons.

"Vouchers don't control costs, they shift them to sick people," noted senior health economist Dr. Edie Rasell, who is also a family practitioner.

Among the study's other findings:

HMOs have raised, not lowered, Medicare's costs as HMOs selectively recruit healthier seniors who have lower medical expenses. HMOs also have much higher administrative costs, CEO salaries, etc.

In 1998, Medicare's costs increased 1.5%, a rate lower than private insurance, and Medicare costs are expected to rise more slowly than private insurance through 2007.

There are quality problems with HMOs for the chronically ill and poor

Seniors' health is more likely to decline in an HMO than in traditional Medicare
HMOs limit seniors' choice of physician and hospital

Raising the eligibility age to 67 would create more than 1,750,000 newly uninsured

"The only way to genuinely control costs is to do the same thing other industrialized countries do (e.g. Sweden and Denmark) -- put young and old together into a universal health program with a global budget," said Rasell, an economist with the Economic Policy Institute. "Their populations are aging faster than ours and yet they have controlled their overall health spending, while ours continues to skyrocket."

Rasell also noted that Medicare should cover prescription drugs. "Medication costs are a major burden for seniors. 79% of seniors have incomes under $25,000 a year and can't afford expensive medications. Medicare could get them at a big discount."

Raising the eligibility age for Medicare to 67 is a "cruel trick," according to Dr. Olveen Carrasquillo, an internist and health services researcher at New York's Columbia Presbyterian. "It would add millions to the ranks of the uninsured at a time in people's lives when they are starting to face age-related illnesses and unemployment. In the long run, it would just add to health costs as people try to put off pressing health needs until they are insured." Carrasquillo is the author of "Going Bare," a recent study of the growing epidemic of uninsurance that appeared in the January issue of the American Journal of Public Health.

"Our number one goal in any Medicare reform must be to improve the quality of health care for seniors," said Dr. Christine Cassel, Chair of the Department of Geriatrics at Mt. Sinai Medicial Center in New York. "It turns out that the best way to improve quality for seniors is also the best way to improve quality for the 45 million Americans who are uninsured and the over 200 million Americans who are underinsured --by creating a genuine national health system with coverage for long-term care."

"This study will be, I hope, the nail in the coffin of pushing seniors into HMOs in the guise of "saving Medicare," said Dr. Quentin Young, Past President of the American Public Health Association and National Coordinator of Physicians for a National Health Program. The best solution to the Medicare crisis is a not-for-profit, single payer national health program for all Americans."

Copies of "Rebuilding Medicare for the 21st Century: A Challenge for the Medicare Commission and the Congress" (February, 1999, 36 pages with references) are available from the California Physicians Alliance at (510) 832-7134 or Health Access/The National Campaign to Protect, Improve, and Expand Medicare at (415) 395-7959.

Click here for an online version of the report.