In the State of the Union address tonight, Bush is expected to put forth a series of proposals aimed at addressing the nation’s ailing health care system. Critics contend that Bush’s proposals will ultimately discourage people from seeking the care they need. We hear from a Medicare recipient who testified at the recent Congressional briefing about difficulties she endured under the new drug prescription benefit program and speak with Families USA about Bush’s health insurance plan. [includes rush transcript]
In Bush’s first term, the number of people without health insurance increased by more than 1 million, bringing the total number of uninsured to more than 45 million in 2004. And according to the Kaiser Family Foundation, the cost of a health-insurance plan for a family of four hit over $10,800 last year. This was 70% more than in 2000.
In tonight’s address, Bush is expected to put forth a series of proposals that include tax deductions for out-of-pocket medical expenses, expansion of health savings accounts and tax breaks for small businesses and individuals who buy their own health insurance. But critics contend these proposals do little to expand health coverage, and in fact transfer much of the health care costs to the individual. They argue that ultimately this discourages people from seeking the care they need.
Another issue the President is expected to address tonight is Medicare. At the start of the year, the new Medicare prescription drug benefit went into effect. It has already been plagued by a host of glitches angering both seniors and pharmacists. Under the new program, millions of senior citizens and disabled people are eligible to enroll in private plans run by insurers and pharmaceutical benefit companies. Bush pushed through the plan in 2003 and touted the program as benefiting low-income seniors. However, the Social Security Administration recently found that the plan is leaving at least 4.7 million low-income seniors without the benefits they are entitled to.
- Ron Pollack, Founding Executive Director of Families USA.
- Ruth Grunberg, Medicare recipient who testified at the recent Congressional briefing to examine how the new Medicare drug benefit is working.
JUAN GONZALEZ: Here to discuss these proposals and other health care issues is the Executive Director of Families USA, Ron Pollack. He joins us in our D.C. studio. Welcome to Democracy Now!
RON POLLACK: Thank you so much. Delighted to join you.
JUAN GONZALEZ: Well, could you give us an idea of some of the proposals that you expect the President to put forward tonight and what some of the concerns of your organization are about them?
RON POLLACK: Well, I think the cornerstone of what the President will propose tonight will be an expansion of health savings accounts. Now, what these are, they’re tax-preferred investments that people can put away into an account if, but only if, they sign up for a plan that has high deductibles. Now what do I mean by high deductibles? High deductibles mean, for somebody buying insurance for themselves, could be as high as about $5,000; for family coverage, as much as $10,000. What that means is, say you’re purchasing coverage for your family. Not only do you pay the premium, which could be thousands of dollars, but then before you get any kind of coverage from your insurance policy, you’re going have to pay the first $10,000 out of your own pocket.
Now, what does this mean? It means that for most people with these high deductible policies being pushed by the President, health care, in fact, will be more unaffordable than it is today. Except if you’re wealthy, these high deductible policies often mean that people simply can’t afford to get the health care that their doctor feels they should receive. Now, what happens is that the wealthy, for whom these deductibles are not a problem for them to pay and who don’t have any problems putting money away into one of these health savings accounts, they will get a tax break. And because they’re in a high tax bracket, that tax break will be of greater value to them. So, for the wealthy, especially if they are healthy, this is a great deal. But for those people who are moderate income people, those people who have health care problems, especially if you have some chronic disability or health problem, this is a real problem.
Now, one of the real bad effects of this is that when the wealthy, particularly the "and healthy," go into these health savings accounts, they leave the rest of us in traditional insurance. And guess what happens. When the traditional insurance pools only include people who have health problems, who have disabilities, the premiums will skyrocket. And so, my belief is that what the President is doing tonight — he’s doing one good thing. He’s alerting the public to the health affordability crisis, but then he’s going to make that affordability crisis worse, because for the most of us, it’s going mean we’re going to have higher out-of-pocket costs.
JUAN GONZALEZ: And does this, in essence, defeat the whole purpose of insurance to begin with, which is to spread risk among a large number of the population, and therefore everyone benefits from this spreading of the risk?
RON POLLACK: Absolutely. The whole purpose of insurance is to take those people who are not likely to make a claim with those people who are more likely to make a claim, and by doing that, when you spread the risk, for those people who have the biggest potential problems in terms of health care and need more health care, it means that health care is more affordable for them. Now, if you separate the groups, and you have the healthy and the wealthy going into one pool and those of us who are more middle income and are more likely to make claims, guess what happens. It means for those people in these traditional insurance pools, the costs are going to be much higher, and the premiums are going skyrocket. And so, I think, while it’s commendable that the President is going to call attention to the affordability crisis that exists in America on health care, unfortunately his prescription is going make it worse.
JUAN GONZALEZ: There are also indications that is he may have some proposals in terms of people being able to carry the portability of health insurance from one job to another. Any thoughts on that?
RON POLLACK: Well, I think portability is something that we do want. But I’m not sure that the President is going to do a whole lot here that’s going to be helpful. I think he is likely to make sure that those people, when they move from one job to another, that there will be continuity of coverage. But we essentially have that today. I don’t expect something major, in terms of what the President is going to propose. Unfortunately, what we are seeing, however, is in terms of some of the things the President has already proposed or is implementing, the health care system in many ways is getting worse.
We see what the President has proposed with respect to the Medicaid program. Medicaid is the program for children, seniors, people with disabilities, who have lower incomes. The President has proposed increasing the costs for people on that program, higher premiums, higher out-of-pocket cost, and at the same time, reducing benefits. And so, the people who are most vulnerable, who now participate in Medicaid — there are 53 million people who participate — they are going to be at greater risk of either becoming uninsured or, even if they remain in Medicaid, it’s going be tougher for them to pay for the health services that they need because of these greater out-of-pocket costs.
And, of course, I don’t think your listeners and viewers need to be reminded about the fiasco of this implementation of this new Medicare legislation. There are a lot of very low-income people who used to get prescription drug coverage through Medicaid. As of December 31, they lost that coverage in Medicaid, and in order to continue getting coverage, they had to sign up for a private plan, and many people just fell through the cracks. And you’re seeing over half the states in the country intervening, because a lot of people who used to have prescription drug coverage are no longer getting it, or they’re going the drugstore and the pharmacist is saying you’re going have to pay a huge amount of money for the drugs you used to get essentially for free. So, unfortunately, this administration’s health care record leaves a lot to be desired.
JUAN GONZALEZ: We’re going get into that Medicare issue in a second and talk to one of those people who did fall through the cracks. But I would like to ask you one more question about the issue of preventive care. Obviously, most studies show that the largest share of our health care costs come from a small portion of population who have catastrophic illnesses. What about preventive medicine and efforts to prevent illness in the Bush administration’s plans?
RON POLLACK: Well, that’s a very important issue, because preventive care and primary care is essential. If you want to avoid having some major illness spread, you want to get care and you want to get diagnosis early. Now, with these health savings accounts, in order to get a health savings account, you have to sign up for a plan that has a high deductible. Now, what does a high deductible do? It actually inhibits you from getting preventive care and from getting primary care. That’s the best kind of health care. And so, unfortunately, the President, through these health savings accounts, is actually pushing the country more to a disease-funded system, rather than a prevention-focus system, and a lot of people who could get care on a timely basis if they had preventive care and primary care are going to be discouraged from doing so because of the high deductibles that they will face. So, this is exactly the wrong direction for us to go with our health care system.
JUAN GONZALEZ: Well, as you mentioned, one issue the President is expected to address tonight is Medicare. At the start of the year, the new Medicare prescription drug benefit went into effect and has already been plagued by a host of glitches, angering both seniors and pharmacists. Under the new program, millions of senior citizens and disabled people are eligible to enroll in private plans run by insurers and pharmaceutical companies. Bush pushed through the plan in 2003 and touted the program as benefiting low-income seniors. However, the Social Security Administration recently found that the plan is leaving at least 4.7 million low-income seniors without the benefits they’re entitled to. Joining us on the phone is Ruth Grunberg. She’s a Medicare recipient who recently testified at a congressional briefing examining how the new Medicare drug benefit is working. Welcome to Democracy Now!
RUTH GRUNBERG: Thank you.
JUAN GONZALEZ: Could you tell us about your experience and what you told the members of Congress when you testified?
RUTH GRUNBERG: Yes. I went to the pharmacy January 1st and found I couldn’t get my prescriptions. My card didn’t work and none of the numbers to fix the problem would work, either. I then tried to call the government officials that I knew of to, you know, solve the problem, and they were all paralyzed by busy phone numbers, confusion. And I began realizing after a few days that not only was there a problem, but in the meantime, people who were ill and needed medicines weren’t getting them. And to me, that was unconscionable. And so I kept phoning. My local newspaper did a story. And when Congress decided to hold a hearing, the House Government Reform Committee, my name came to their attention.
And I went down there, and I testified about my experience. And I told them that although this program was supposedly going to give me extra help and create security, I now felt more insecure than ever before. And before this program began, I was getting my prescriptions through the various pharmacy companies that would cover their own drugs. Well, now, I discovered that there are gaps. There are things that aren’t covered, and suddenly I actually am worse off than before.
And when you try to fix a problem, not only are there a huge bureaucracy of denials and appeals, but health insurance companies are now telling people, 'Oh, well, the problem really, it's Medicare that made us exclude this drug. Call Medicare or call your congressman if you have a complaint.’ And many of the phone numbers are still busy a lot of the time or have you on hold for an hour or two until you can speak to somebody.
JUAN GONZALEZ: Ron Pollack, do you see this as part just of problems of implementation — the rapid implementation of the plan? Or do you see that there are some basic structural problems in the way it was conceived?
RON POLLACK: Well, there are real problems with the way this program was structured. The key thing that I think made this program consumer-unfriendly were the demands of the pharmaceutical companies. Their main interest here was to make sure there would be no interference with their ability to price drugs as high as they have and continue to have them skyrocket. So, they did this —- they succeeded in two specific measures in the legislation that was passed in 2003. First, there is a prohibition in the statute that prevents Medicare from bargaining for cheaper prices. By the way the Veterans Administration does that for veterans very successfully, and the prices that veterans are able to get through the VA are considerably cheaper than what the Medicare program provides. The second thing -—
JUAN GONZALEZ: And why would that be put in? I mean, obviously, any major company, whether it’s Wal-Mart or anyone else, wants to negotiate on the basis of volume.
RON POLLACK: Well, it was at the behest of the drug lobby. The drug lobby wanted to make sure there would be absolutely no interference in their ability to price drugs like they want and to continue to have them skyrocket. And it really was at the behest of the drug companies that actually played the biggest role in influencing the development of this legislation.
But they were able to achieve one other thing. They were afraid that at some point Congress might want to reconsider this prohibition that prevents Medicare from bargaining for cheaper prices. So the other thing that they pushed for successfully was to make sure that Medicare would not administer this drug plan, but rather it would be administered by private insurance companies. Now, what that means is in communities all across the country, there are forty to sixty plans for people to choose from, which has caused enormous confusion. But in terms of what the drug companies wanted, it means that none of these companies have a sufficient market share to bargain with the drug companies to get prices down.
And so, as a result, through the drug companies’ success in promoting their agenda in this legislative process, we’ve got a profusion of confusion with so many different plans, all with different premiums, deductibles, co-pays, so-called donut holes, gaps in coverage, prices in drugs, what drugs are listed that you can get, what drug stores you can go to. And so seniors are absolutely bewildered. But in addition to that, seniors are paying much more out of pocket in premiums, deductibles, and co-pays, because there was no meaningful bargaining, and the taxpayer who is paying about three-quarters of the cost of this drug program is being fleeced. It really is the worst of all worlds.
JUAN GONZALEZ: Well, I want to thank you for enlightening us, Ron Pollack, the Founding Director of Families USA, and Ruth Grunberg, a Medicare recipient who has been a victim of the new Medicare drug benefit plan. And we’ll be following this in further reports in Democracy Now!