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Jewish World Review June 3, 2003 / 3 Sivan, 5763

Michael Barone

Michael Barone
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Consumer Reports

Next stop, Medicare? |
John F. Kennedy proposed his big tax cut in January 1963. It was passed, somewhat amended, in February 1964, 13 months later. Medicare was first proposed in 1957. It was passed, somewhat amended, in 1965, eight years later. George W. Bush proposed his latest tax cut in January 2003. It was passed, somewhat amended, in May, four months later. Bush also proposed Medicare reform, with a prescription drug benefit, in January. Congress is taking it up this month, and the prospects for passage before July 4 are not bad. The Bush administration and a narrowly Republican Congress are making important changes in major public policies more rapidly and with less fuss than the Kennedy-Johnson administration and a heavily Democratic Congress did 40 years ago.

This is all the more remarkable because there was little public demand for a tax cut. And it must be said that Congress made significant changes in the Bush proposal. The chief architect of the tax bill was House Ways and Means Committee Chairman Bill Thomas, who came up with the idea of cutting the tax on both dividends and capital gains to 15 percent. Thomas, who was a professor at Bakersfield Community College before he was elected to the California Assembly and Congress in the 1970s, is a hard worker who understands both policy and politics in great detail. He is a famously difficult man, given to sneering comments about colleagues and impromptu angry press conferences. But on taxes and Medicare, the Republican leadership has let him take the lead, and on taxes he has come through.

Either/or. Now comes Medicare, a much harder issue. The administration has produced no draft legislation, just a "framework." The idea is to use the leverage of the demand for a prescription drug benefit to make Medicare more like the Federal Employees Health Benefits Program (FEHBP). Seniors would be offered a choice: 1965 Medicare with a drug benefit or an array of health maintenance organizations (HMOs) and preferred provider organizations (PPOs), with varying drug benefits. There would be more options than under the 1997 law encouraging HMOs, which has had disappointing results: HMOs closed up shop in many states and are unavailable in most rural areas; only about 15 percent of seniors are enrolled in them. Thomas, who pushed a stand-alone prescription drug benefit through the House in June 2002, is aiming for a mid-June markup in committee. There's little doubt that Speaker Dennis Hastert and Majority Leader Tom DeLay can round up majorities on the floor.

In the Senate, key roles will be played by Democrat John Breaux and Majority Leader Bill Frist. Breaux got a majority of the Medicare commission in 1999 to recommend reform along the lines of the FEHBP and was deeply disappointed when Bill Clinton rejected that. A key issue is whether the drug benefit in 1965 Medicare will be as generous as those available from HMOs and PPOs: Finance Committee Chairman Charles Grassley and ranking Democrat Max Baucus, from rural states with no HMOs, will surely insist on that. Finance may move to markup before Ways and Means, and Breaux hopes that if a bipartisan bill reaches the floor, the pressure for passage will be irresistible.

One problem: The tax cut required only 51 votes for passage, but Medicare may require 60. Some Democrats are opposed to having private insurers in the program on the grounds that it would amount to a retreat from 1965 Medicare's one-tier structure, which they hope will someday be a model for a national health insurance system. But other Democrats seem more interested in getting a generous prescription drug benefit and may be willing to accept more private options in exchange. Sen. Edward Kennedy could play a major role here in either passing or stopping a bill.

There is a political calculation for Democrats, as well. In the 2002 elections, they didn't get the mileage they had hoped from the prescription-drug issue because the Republican House passed a bill and the Democratic Senate failed to do so. Now, if the Republican House passes a bill, and if a Senate majority is frustrated by a filibuster, Republicans will be able to say that obstructionist Democrats denied seniors a prescription drug benefit. It is significant that none of the Democratic presidential candidates' health plans emphasizes prescription drugs, presumably because that issue would be pre-empted if Congress passes a bill. The Bush administration stumbled badly on this issue last winter. But it could win a significant victory now, with dazzling speed.

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Michael Barone Archives

JWR contributor Michael Barone is a columnist at U.S. News & World Report and the author of, most recently, "The New Americans." He also edits the biennial "Almanac of American Politics". Send your comments to him by clicking here.


©2002, Michael Barone