Band-Aid Measures

Editor's Note: This article is part of a feature package from In These Times called "8 Ways to Build a Better Body Politic."

Like Capistrano's swallows, the Democrats always return to health reform. Unfortunately, this year they're showing little more brain power than the birds.

Don't get us wrong, we're no fans of President George Bush's health agenda: Ship tens of billions of federal dollars to a panoply of healthcare firms, privatize Medicare and dangle skimpy tax credits in front of the 44 million uninsured Americans. But Kerry seems intent on refilling a failed prescription for reform: by proposing to give hundreds of billions to private insurers in exchange for measly coverage for some of the uninsured.

Our healthcare system is so sick that even people with good insurance are feeling the fever. Premiums for employers and their workers are rising 12 percent, even 18 percent per year. Employers have downsized coverage by super-sizing copayments and deductibles. Insurance often proves illusory when it's most needed – payment denials, visit limits, loopholes and policy cancellations leave millions stuck with huge medical bills despite what they thought was good coverage. Most people's choice of doctors and hospitals is restricted. Seniors can't afford drugs, Medicaid recipients face draconian cuts and everyone's rushed out of the hospital.

Investor-owned healthcare has flourished, despite definitive evidence that it raises both costs and death rates. And bandit CEOs regularly raid our health-care system, making off with seven- and even eight-figure incomes as their reward for cooking the books, defrauding Medicare and abusing patients to inflate profits.

Bush's single healthcare achievement, passage of the $534 billion Medicare prescription drug bill, already is unravelling. Double-digit yearly price increases – even for older drugs – already have eaten up the paltry savings (about 15 percent) available from the recently introduced Medicare drug discount cards. Even the massive flow of federal funds that will commence in 2006, when the full drug benefit kicks in, will only get seniors back where they started last year in terms of drug spending.

Why will $534 billion in new federal spending (over 10 years) buy so little? First, the new drug coverage will be purchased through private insurance plans with overhead costs that average four times that of Medicare. Second, the bill prohibits Medicare from negotiating with drug companies to lower their prices (and effectively bans imports of Canadian drugs on the preposterous pretext that they're unsafe). Both the Canadian government and our own Defense Department have used their purchasing clout to garner volume discounts. Prohibiting such bargaining assures drug firms of hundreds of billions in excess profits.

Finally, the bill hands Medicare HMOs – which have been ripping off Medicare for years – an extra $46 billion. Since 1985, Medicare has paid HMOs for seniors who choose to enroll. The payment formula has allowed HMOs to collect far more than it would have cost the taxpayers to care for these seniors in the traditional Medicare program. The Congressional Budget Office and the General Accounting Office have estimated these extra costs at about $2 billion per year. Yet HMOs – burdened by administrative overhead far higher than Medicare's – complained they couldn't make a profit from Medicare patients.

Bush's solution? Send them more money. So in 2004, Medicare will pay HMOs an extra $552 above the cost of traditional Medicare for each senior they enroll, according to an estimate by the Commonwealth Fund.

Incredibly, the Republicans (and many Democrats) describe this corporate welfare program as a "pro-competition" health policy. Drug firms are granted patents that shield them from generic competitors, foreign drug imports are banned, government is precluded from negotiating prices and HMOs are given huge subsidies to compete unfairly against Medicare – all in the name of competition.