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November 18, 2003

Don't Bash AARP- Medicare Already Privatized

To repeat, I don't like the Bush Medicare policies, but people shouldn't act like Medicare is some kind of medical socialism. As this description of the program makes clear, it's been a hybrid of public and private operations for a long time. The main government bureaucracy is called the Center for Medicare & Medicaid Services (CMS) and works extensively through private companies:

CMS-administered programs provide health insurance to more than 74 million people-- about one fourth of all Americans. It spends more than $360 billion a year for covered services and operates on an annual budget of about $2.2 billion-- two thirds of which is paid to 55 private contractors that process claims, pay providers, and handle appeals.
One meme going out there is that AARP is corrupt and wants to make money by supplanting Medicare's bureaucracy.

As a 35-million person membership-run cooperative, there are worse things to imagine than AARP supplanting many of the private contractors currently involved in Medicare.

I doubt that's what happens, but if AARP sees advantages for its members from changes in the system, that should be respected. Yes, they may have some institutional self-interest in those changes, but institutional self-interest is not always wrong-- if the institution is worthwhile.

I think AARP made some bad strategic moves in negotiating over a bill they agree is not ideal, but I even more think progressives bashing AARP is a worse strategic move.

Update: Part of the AARP-bashing out there is blaming it all on AARP CEO Bill Novelli (yes a Republican), but it's worth reading the AARP statements on the Medicare bill by Novelli himself as the bill was sent to conference. It makes most of the criticism all progressives have made of "premium support" and subsidies for private plans at the expense of fee-for-service Medicare members. While you can argue that AARP should have stuck to their guns and resisted the final bill, but it's ridiculous to read Novelli's statements and picture the AARP as somehow becoming a cheerleader for privatizing Medicare.

Here are some excerpts:

AARP opposes a premium support structure, such as in the House bill, that could destabilize the Medicare program and require beneficiaries to pay even more out-of-pocket. Despite the phase-in, the model in the House bill does not create a level playing field and in fact will penalize those who choose to remain in traditional Medicare...Even with the best risk adjustment available today, the premium support proposal in the House bill would likely harm traditional Medicare and those who depend on it.

AARP believes that there must be a guaranteed drug plan available for all Medicare beneficiaries -- regardless of where they live...Even the fallback approach could result in instability because the government contract would be for only one year and would not be renewed if a private plan subsequently entered its region.

Medicare must remain a program in which everyone who pays in receives the benefit. Altering the level of the benefit based on beneficiary income would erode the universal nature of the program.

The ultimate test for a successful Medicare prescription drug benefit is whether it will provide needed relief for Medicare beneficiaries...AARP believes the remaining coverage gap is simply bad policy, is unnecessarily confusing, and will prove to be a disincentive to enrollment.

We applaud the promotion of generic drugs with the inclusion of versions of the "Access to Affordable Pharmaceuticals Act" in both the House and Senate bills. This provision is designed to remove barriers brand-name companies have used to delay entry of lower priced generic drugs into the market. We urge that the conference agreement not weaken further the provisions in the Senate bill.

So this was the negotiating position of the AARP going into the conference committee. You can argue that they settled for too little and oppose the compromise themselves, but the principles laid out by the AARP were hardly Gingrich-lite.

Posted by Nathan at November 18, 2003 04:46 PM