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Commentary By David Gratzer

GOP Giveaway To Granny

AFTER giving a speech on selling the Republican message, pollster Frank Luntz was recently asked how to articulate a credible argument on health care. He threw up his hands in despair. The party's leaders in Congress also seem to have given up - and settled on an old fashioned sell out.

Consider: Late last month, Republicans pushed through Medicare reform that Nancy-Ann DeParle calls the "biggest expansion of government health benefits since the Great Society." DeParle, by the way, is a former Clinton official.

The House and Senate bills differ, but they are fundamentally similar: For a small monthly payment, elderly Americans will be able to add a drug benefit through Medicare. The price tag is stiff: The Congressional Budget Office estimates this will cost the taxpayers $400 billion over 10 years.

All this to solve Medicare's lack of prescription-drug coverage. Yet most seniors already have coverage; 76 percent have some type of plan.

And for those without, the situation isn't necessarily dire. On average, elderly Americans spend about $1,000 a year on drugs, less than they spend on entertainment. According to the journal Health Affairs, only about 2 percent of elderly Americans actually don't fill a prescription because they can't afford it.

Let's be clear: That's still too many - but it hardly justifies an expansion that will include not only the chronically ill and the poor, but the Warren Buffetts and the Merv Griffiths.

If Congress tried to deal with homelessness like this, Washington would send a check to every American, even those with mansions. Republicans aren't restructuring Medicare; they're pulling a giant pills-for-granny give-away.

They see good political reason to sell out on Medicare reform: They want the issue to disappear before the next election. But a Band-aid solution today will do nothing to solve the long-term problems.

And the real problem with the great Republican sell out of 2003 is that it doesn't restructure Medicare.

Yet the four-decade old program badly needs a rethinking. Two quick examples:

  • To contain its rising costs, Medicare underpays physicians. So, not surprisingly, many doctors hesitate to take new Medicare patients. In places like Denver, it's hard for the elderly to find a doctor - only a third will accept Medicare patients.
  • Medicare requires hospitals and other providers to comply with over 100,000 pages of regulations. A study for the American Hospital Association found that for every hour of care delivered to a Medicare patient, hospital officials spend roughly a half-hour completing paperwork.

And at the end of the day, Medicare is unsustainable. Without reform, the program will consume a quarter of federal revenues in just 30 years. It doesn't need an expensive, unfocused new addition. It needs an overhaul.

Members of Congress don't have to look too far to find a model for Medicare reform. Their own health plan, the Federal Employees Health Benefits Plan (FEHBP), will do just fine.

Under the FEHBP, the country's 9 million federal workers and their families can pick from various competing plans. FEHBP is open to virtually any private plan or insurer meeting some basic benefit requirements. Premiums vary to reflect the plans' benefits. Employees tend to be satisfied - and costs have been well contained.

Republicans need to go back and try their hand at meaningful reform. That is, try to instill choice and competition into Medicare, as President Bush suggested in his January State of the Union address. Republicans, after all, should be in the business of reforming entitlements, not expanding them.