^{Posted on January 29, 2003}

Bush trades Rx benefits for tax cuts

By Thomas Oliphant, 1/28/2003

WASHINGTON:PRESIDENT BUSH took office two years ago with a preposterous message against the gauzy backdrop of a phantom budget surplus that we could have it all - lower taxes and more services and benefits.

This week the message hidden in the fog of pre-State of the Union propaganda is that we can't and that Bush wants to attack the services and benefits that make up America's social contract to keep the tax cuts coming.

The best and biggest example is Medicare.

Behind PR words like ''choice'' and ''competition'' and the alleged ''magic of the marketplace'' lies an option for the country's retired people that Bush has rejected. He hasn't rejected it because he considers it bad policy; it was considered an obvious part of a responsible health care policy. Instead, he has rejected it because he places a higher priority on cutting the top income tax rate and eliminating the levy on stock dividends.

The rejected choice would have added a prescription drug benefit to Medicare. It would have required major changes in basic Medicare to reduce the growth in its costs - currently more than $260 billion a year. But the changes would not touch Medicare's essential features, which nearly two generations of retired people have embraced wholeheartedly.

In studying this option, administration officials went to great lengths to estimate how many retired people would choose it. Their conclusion was that virtually everyone would. The idea would have stimulated bipartisan discussion. There would have been vigorous arguments about the scope of the drug coverage and the extent of the cost controls, but the option would have nudged toward agreement.

The rejection of this choice had nothing to do with its merits and everything to do with Bush's domestic priorities. The cost was estimated to be nearly $470 billion over the next decade. In demanding that $100 billion come out of a Medicare initiative, the president changed the politics from center to right.

To protect his tax cuts, Bush came up with a three-pronged hybrid based on coercion and cave-ins to his party's campaign cash cows - insurance companies and their health maintenance organizations, drug companies, and for-profit health care providers. To call these three prongs ''choices'' borders on the obscene.

The first one is fee-for-service Medicare as we know it. Not even Bush would propose eliminating this choice for those in or nearing retirement. The only problem with his initiative is that for those who choose it there would be no prescription drug benefits - none. That is the classic Hobson's Choice - in reality, no choice at all.

To get even a puny drug benefit as well as limited coverage for the catastrophic illnesses that can land a person in a nursing home, there would be two paths open to the elderly.

One is HMOs and the managed care that Americans, with good reason, love to hate. For the growing population of basically healthy Americans in retirement this can be a genuine option were it not for the fact that insurance companies have been dropping coverage under Medicare by the millions recently because they don't like the profit margins. In many parts of the country there are simply no HMOs offering retired people coverage. Bush wants to offer them higher profits and a new, coerced market.

To fill the remaining, cavernous gaps, he is also offering a national alternative run by for-profit companies. The details are sketchy, but this ''coverage'' would reimburse no catastrophic costs up to $6,000 annually. For drugs, a retired person would pay half his costs up to $3,000 and receive no reimbursement for costs between $3,000 and roughly $5,500. For the first time, there would even be a requirement for copayments for home health care - in effect a new tax on the infirm trying to stay out of the hospital.

You can also bet that the Bush proposal will include nothing resembling restraints on soaring drug prices or for-profit provider charges. Given current trends, you could almost imagine every one of Bush's new dollars getting snapped up in higher prices and fees.

This abomination did not emerge out of administration discussions about health care policy. Instead, it emerged out of discussions about budget priorities.

Right now the government's hemorrhaging finances are mostly the result of a slumping economy and the higher costs of war. Down the road, however, the cause of an even greater hemorrhage will be tax cuts.

Something had to give, and Bush has decided that to preserve all those tax cuts, that something should be Medicare and its 40 million elderly beneficiaries.

Thomas Oliphant's e-mail address is oliphant@globe.com.