September 16, 2004 Last update: September 16, 2004 at 6:43 AM
Forty million elderly Americans got a nasty surprise this month when the Bush administration announced that their Medicare premiums will rise by a record 17 percent next year, to $78.20 per month. Democrats were quick -- too quick -- to blame the White House for what is a very complicated development. But the announcement does show that the president's promise to make Medicare work better for senior citizens has been mostly hollow after four years.
Setting politics aside, there are many reasons for the sobering jump in Medicare premiums. Medical costs are rising at a scary pace -- ask any employer or consumer who buys health insurance -- and Congress has backed off from many of the cost-containment measures it imposed on Medicare in the late 1990s. And it's worth remembering that Medicare remains a bargain: Taxpayers pick up 75 percent of the Part B premium, which covers physician services and outpatient care.
Nevertheless, the bad news on premiums is one more sign that the Bush administration has botched health care policy in general and Medicare reform in particular. The administration's key cost-control strategy for Medicare was to introduce competition from private managed-care companies, which were supposed to deliver more benefits at lower cost. Yet the president's massive Medicare legislation last year included billions of dollars in additional payments to lure private insurance companies into the Medicare market, and White House officials admitted last week that fully 15 percent of the new premium increase reflects those extra payments to private health plans. It's a curious strategy to rely on private-sector insurers to drive down Medicare costs, then pay them extra money to join the program. Medicare's premium increases throughout the 1990s were routinely smaller than this year's increase because the Clinton administration used Medicare's huge buying power to hold down costs, a strategy that this administration explicitly rejected.
Medicare's financial problems are hugely complicated and certainly predate George W. Bush's arrival in Washington. And yet the premium episode is just one more sign of how badly the White House has mismanaged and miscalculated health-care policy for the elderly. It let insurance lobbyists and drug manufacturers write key provisions of last year's massive Medicare Modernization Act, deliberately and egregiously concealed the bill's true cost until Congress had passed it into law, and then embarked on an expensive campaign to convince America's elderly that the law has done them a huge favor. Now that the bills are coming due, elderly voters know better.
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