Analysis: Medicare means testing unlikely

WASHINGTON, July 8 (UPI) -- Health care analysts say means testing for seniors in Medicare would not help the program's shaky finances significantly, but it does create a political fear factor for Democrats who see Republicans as trying to eat away at America's social commitment to its elderly.

The Medicare prescription drug bills passed by the Senate and the House now are with a conference committee that will meld them into one final piece of legislation to go back to each body for final votes. The House bill contains a provision that would force senior citizens earning over $60,000 a year to pay more toward their prescription drugs. The Senate bill does not contain a means testing provision.

Democrats in the Senate hotly opposed means testing. An amendment by Sens. Dianne Feinstein, D-Calif., and Don Nickles, R-Okla., to apply it to Part B Medicare premiums, was left out to garner liberal Democratic support in passage of the Senate's Medicare drug bill late last month. It would have set the floor income for means testing at $75,000 per individual.

Sen. Edward Kennedy, D-Mass., has said he would not vote for the final bill if it contains means testing. It is expected other Democrats will follow his lead, which could spell trouble for the entire Medicare prescription drug bill in the Senate.

In the pending legislation, Republicans gave in to Democrats' demands that a prescription drug benefit be equal, whether provided through traditional Medicare or through new managed care options. The Republicans had wanted a higher benefit in the privately insured managed care arm of the package to entice the nation's 35 million Medicare beneficiaries to leave the traditional fee-for-service program.

In return, Democrats supported conditionally the GOP's demand that private insurers receive a bigger role in Medicare. This would be accomplished by introducing private plans for prescription drugs in traditional Medicare and preferred provider organizations as an alternative to the basic fee-for-service program package. Adding means testing became controversial, in the Democrats' view, because it would move Medicare even farther away from a government-run program providing uniform benefits to all participants.

Analysts told United Press International they were surprised the measure even made it through the House, a nod to conservative GOP influence. Most said they did not expect means testing language to remain in the final bill that must pass both the House and Senate.

The provision is not crucial to the bill becoming law. President Bush, seeking a domestic boost for his upcoming re-election campaign, has indicated he will sign any Medicare bill that comes to him -- means testing notwithstanding.

Democrats think passage of means testing would weaken the program's social contract with all seniors to provide health care coverage during their retirement years and turn it into a welfare program for poor seniors, which could erode bipartisan support on Capitol Hill.

"That is always a Democratic fear -- it's not very far beneath the surface," said Len Nichols, an analyst with the Center for Studying Health System Change in Washington, D.C.

As a policy issue, means testing generally is an acceptable way of controlling costs. Indeed, many analysts think it should be part of Medicare, which will slide into financial insolvency over the next 20 years as Baby Boomers retire and swell Medicare-eligible numbers to an estimated 79 million. That is double the 35 million seniors and 4 million disabled covered by the program now.

"You can't save Medicare by means testing. However, it is and it should be part of a cost savings strategy," said Robert Bixby, executive director of the Concord Coalition. "I suspect it will not survive the conference but I hope it does."

Means testing certainly is not new in government. It is used in various programs, such as in Medicaid, the indigent health care program; and in tax credits, such as the one for childcare.

Medicare already uses a means testing structure at the low-income end of the scale. State governments have programs that help pay for the Part B premiums, which cover physician and other health care services. Medicare beneficiaries must meet strict income and asset levels to participate.

The concept of means testing has not always been an anathema to Democrats. As recently as 1997, the Senate came close to passing Medicare means testing -- along with raising the eligibility age from 65 to 67 -- as a way to cut program costs. President Bill Clinton generally supported the idea but it died because of a controversy over how it would be administered. Democrats wanted the program to be run by the Internal Revenue Service while Republicans wanted the Department of Health and Human Services to handle it.

Bottom line: Even if means testing becomes part of the new Medicare prescription drug bill, it would not cure the programs' looming insolvency.

"I don't think it is going to affect a lot of dollars," said Marilyn Moon of the Urban Institute. "A relatively small number of (elderly) people have incomes above ($60,000).

Nichols added that two-thirds of senior citizens have incomes below $20,000.

Moon said the issue of administering the program again would arise and it might be that means testing is more trouble than it is worth economically.

"This is a precedent setting issue ... Democrats are afraid of," she said, adding that a means testing program would be "complicated to run" and would face the threat of being seen as an unpopular "seniors' tax."

Bixby said means testing would not turn Medicare into a welfare program but simply would be "cutting back people who don't need the money" provided by the more generous subsidy.

The Democrats' success in thwarting means testing at this juncture could be a predictor of the party's ability to steer future Medicare legislation. After expected passage of a prescription drug bill -- which no one is calling perfect -- Democrats have vowed to work to expand coverage and keep premiums low for seniors.

With the 2004 elections on the horizon, should the Republicans take additional seats in the Senate, it will become even more difficult for Democrats to hold Medicare firmly within the government fold.