POLICY: Medicare agreement-is it a charade?

So while the news says that the bill is out of conference on Friday and has enough backing to get through, Ted Kennedy basically said  on Sunday that the Medicare bill wasn’t going to make it past him in the Senate. Frist and Hastert meanwhile are trying to broker a bill, without upsetting their conservative wing who (correctly) believe that this bill is a recipe for more cost-unconscious spending in Medicare.  On the other hand as explained at length already here and here, the liberal Democrats and some liberal Republicans like Olympia Snowe are opposed to (or at the least very wary of) the introduction of cost controls or competition/premium support. Jeanne Scott has written a full newsletter this weekend about Medicare (and if you haven’t subscribed yet….). What does she make of all this?

    Just Between You Me. Never ever step on Bill Thomas’ toes!  The sometimes curmudgeonly, but always very powerful, Ways and Means Chair, is reported to believe that the proposal does not do enough to make Medicare fiscally sustainable. And he definitely was not happy that a deal had been cut over his head. Walking with his feet, Thomas left the conference room, threatening to fly home to California rather than accept the imposed deal. Later he was reported meeting with House Energy and Commerce Committee Chaircritter W.J. "Billy" Tauzin (R-La.), hoping to draw up an alternative to the Frist and Hastert’s proposal. The Republican criticism raises the possibility that, if Mr. Frist can’t hold his own party together for the deal, that it won’t survive a yes-or-no vote in the Senate, let alone a filibuster situation demanding 60 votes to cut off debate. Don’t hold your breath on passage by this coming Friday.

    So Where are We After All of This? Conservatives say the cost containment and market components of the bill do not go far enough to hold down spending as baby boomers strain the program’s spending. Liberals say the reforms threaten the very existence of Medicare and constitute the first step toward privatizing one of the most popular government social programs. Don’t hold your breath, but there may be life in the old gal yet.

My sense is that Medicare remains unreformable given the parity in the Congress and the huge political gulf between the Conservative House Republicans and the old style Liberals in the Senate.  But given that the election next year is going to be about Iraq and the economy, I’m not sure that Bush is willing to over-ride his fiscal conservative allies on the fiscal issue in order to get a bill through at any cost. Meanwhile, the bill’s lack of popularity with many seniors is probably enough to sustain a filibuster, so that Ted Kennedy can claim that he saved Medicare.

My guess is that nothing gets by this week. And thus I’m now officially short one of the PBM stocks (in a tiny and cautious way!).

Update The Business Word has another take on this, and I’m glad to say that Donald Johnson over there has been blogging much more regularly of late.  But he too believes that the bill may not happen.  I’m sure we both agree that it’s disapointing that what is a necessary reform for Medicare (adding drug coverage) has been so politicized.  However, AARP’s endorsement may not be such a great thing, especially given the questionable popularity of the bill amongst middle income seniors.  Here’s Jeanne Scott on AARP’s last intervention in Medicare drug coverage:

    And AARP May Screw Seniors Yet Again: AARP (formerly the American Association of Retired Persons, now just plain old “AARP”) may put the screws to seniors again, just like it did in 1988 when it killed the first Medicare Rx proposal. In 1988, AARP orchestrated a highly misleading campaign to convince seniors that they were being unfairly taxed to support the new Rx program  — that law called for a 10% “surtax” to be paid on the federal taxes owed by seniors. Every grandmother in the country was told she would have to pay a “tax” when in fact fewer than 12% of all seniors would have paid any tax (10% of “0” is still “0”), and only a handful would have paid more than they might have received back. AARP did this then because it wanted to save its highly profitable “Medi-Gap” insurance business and could care less about its senior members. AARP now may give the “new and improved” Medicare its seal of approval and in return get guarantees that its for-profit subsidiary operations will have an opportunity to participate.  The AARP orchestrated phony “senior sticker shock” of 1988 may be conspicuously absent when seniors face a real sticker shock in 2006.

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