Medicare "Reform":
An Enormous Attack

Dec 1, 2003

Right before Thanksgiving, Congress finally passed the massive 400 billion dollar bill–and then had the nerve to proclaim it a "historic Medicare reform."

For ordinary people: Tiny benefits and big costs

The centerpiece of this so-called "reform" is the prescription drug benefit, which is estimated to cost 228 billion dollars of taxpayers’ money over the next eight years, a huge amount of money. Little of this will actually benefit ordinary people.

Someone who spends $800 annually on prescriptions would actually lose money by participating–through a combination of co-payments, monthly premiums and a $250 deductible. Seniors with drug costs as high as $5,000 will still end up paying $4,000 out of pocket. There are all kinds of restrictions, complicated and torturous rules and regulations, premiums, deductibles and co-payments. The lawmakers even threw in an enormous $2,850 hole, or, as they like to call it, a "donut," in which there is no coverage at all. This bizarre patchwork serves to hide how little benefit most people will get.

Congress is expected to RAISE the cost of the drug coverage every year to seniors, through higher premiums, co-payments and deductibles. The Congressional Budget Office estimates that after eight years, these costs will be practically twice as high, effectively reducing the tiny benefits to next to nothing. By that time, most seniors will lose more than they gain from this program.

Those with the most to lose are the poorest and most vulnerable seniors, six million of whom now receive drug benefits on Medicaid. Under the new "reform," these seniors will lose their Medicaid benefits and be pushed into the Medicare drug program. Although the government promises to compensate them with some form of subsidy, the Center on Budget and Policy Priorities estimates that no matter what, they will be much worse off, both because of higher co-payments and because they will lose access to particular drugs not covered by Medicare.

What the drug companies stand to gain

Someone does benefit from Medicare "reform," however–the pharmaceutical companies. They will receive 228 billion dollars over eight years’ time, with almost no strings attached. Of course, this money is supposed to go to pay for drugs. But under the reform, the government will not control or regulate the prices that the drug companies charge. And, as an added bonus, the government ban on importing cheaper drugs from Canada will continue. So, the drug companies will be free to continue to charge whatever outrageous price they want.

The drug companies will pocket the lion’s share of the 228 billion dollars. According to a recent study done by the Boston University School of Public Health, "Medicare reform" will bring a windfall of 139 billion dollars in increased profits over eight years for what is already the world’s most profitable industry.

In other words, 139 billion dollars out of 228 billion will go into profits, not drugs. The real centerpiece of "Medicare reform" is not drug benefits for ordinary people but pharmaceutical company profits for the bourgeoisie.

Leaving no capitalist behind

The drug companies are not alone in gaining huge benefits from Medicare reform. To the big hospitals and medical groups, Medicaid payments will be increased, rules and regulations will be relaxed, even while the traditional Medicare premiums and deductibles paid by the individual will increase.

Medical insurance companies will gain 12 billion dollars in subsidies either to administer the Medicare drug benefit program or to provide private insurance that includes drug benefits to seniors who opt out of Medicare. The government will not regulate the service that these companies provide, nor will it penalize them for dropping seniors whenever the companies decide it is not profitable enough for them.

What else could the insurance companies want?

The Medicare "reform" also provides new, more profitable options for the big industrial companies, which have been moaning and groaning about the rising costs of retirees’ health care. The government will give them 70 billion dollars in subsidies if they keep drug benefits for their retirees. But if the companies decide that this is not enough, they can always drop them. And, in fact, the Congressional Budget Office has already admitted it expects almost four million retirees to lose drug coverage from their former employers, as a result of this "reform." That’s one third of all private sector retirees who currently have drug coverage.

Medicare "reform" is aimed essentially at "reforming"–that is, boosting–the profits of many sectors of private industry. While it provides little or no help for ordinary people who are increasingly being crushed by rising health care bills, it does stick us and future generations with the bill that will come due in higher taxes and calls for further reductions in social programs, public services and education.

Most of the seniors know it. Certainly, none of them were seen celebrating or demonstrating in favor of the "Medicare reform" that was supposed to be done for them. On the contrary, every opinion poll shows strong opposition among seniors to this "reform." The day after the "reform" passed the Senate, one headline in the New York Times said it all:"Some Experts Foresee Revolt by Elderly over Drug Benefits."

Don’t let the Democrats fool you

Of course, the Democrats are already posturing and positioning themselves to take advantage of this discontent for electoral purposes. Certainly this "reform" was pushed through by the Bush administration and the Republicans in Congress. But this bill could not have been passed without a section of the Democratic Party’s support. In the Senate it had the support of key Democratic Party leaders–and not just well-known conservatives, like John Breaux of Louisiana–but Dianne Feinstein from California, a liberal with the full backing of senior organizations and the AFL-CIO as well. Moreover the Democrats, when they controlled the presidency and the Congress, never made any serious attempt to add a real drug benefits program to Medicare.

This bill is an attack against ordinary people by the two big capitalist parties in the service of the bourgeoisie. Whether or not that whole rotten bunch gets away with it depends on what people do, whether or not they actually "revolt" as "some experts foresee."