Healthy Skepticism Library item: 1487

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Publication type: news

Hallam K.
Calpers Opposes Medicare Compromise, Asks for Subsidy
Bloomberg News 2003 Nov 19

Full text:

California Public Employees’ Retirement System, the largest U.S. pension fund, voted to oppose Medicare legislation to help the elderly afford prescription drugs on concern public agencies would receive less benefit than private companies. Lawmakers in Washington may approve as early as today a compromise plan to spend almost $400 billion over 10 years to revamp Medicare. AARP, which represents 35 million older Americans, and employer groups including the National Association of Manufacturers have endorsed the compromise. Calpers board members, at a meeting in San Diego, said private companies will receive more benefit from the plan because a subsidy offered to companies wouldn’t help public employers, which don’t pay income taxes. Calpers wants a subsidy that would leave public employers on equal footing when government agencies continue to provide coverage to Medicare retirees. ``We do believe that national legislation is needed but this vehicle that Congress is considering does not fit the needs for Americans, particularly for public employers and retirees,’‘ said Robert Carlson, a Calpers board member who is selected by the fund’s retired members. Representative Bill Thomas, a California Republican, led the Medicare negotiations. California Democrats, including House Democratic Leader Nancy Pelosi and Senators Dianne Feinstein and Barbara Boxer, asked Calpers to take a stance on the legislation. Pelosi has said she opposes the plan. Feinstein is undecided. Staff Paper The Calpers board directed staff to prepare a detailed position paper that lists the fund’s specific concerns about the bill. That opinion may help influence how members of Congress from California vote on the compromise, which faces opposition in both the House and the Senate, a former Senate aide said. The pension fund ``can talk to members of Congress from California, but that’s about all they can do,’‘ said Alec Vachon, who is now president of consulting firm Hamilton PPB in Washington. Private employers offering coverage equivalent to Medicare’s drug plan would receive a 28 percent subsidy for a retiree’s drug costs between $250 and $5,000. The subsidy, which will cost the government $70 billion over 10 years, would be excluded from taxable income. Calpers is the third-largest purchaser of employee health benefits in the U.S. after the federal government and General Motors Corp., the world’s biggest automaker by sales. Calpers has 1.4 million members from 2,500 California public employers. Drugmakers The main purpose of the legislation is to offer government funds for medicines, such as Merck & Co.‘s Vioxx painkiller, that Medicare patients buy at drugstores. Currently, only drugs that are administered by doctors are covered. Merck, Pfizer Inc. and other drugmakers are pushing for passage of the measure. Lawmakers are waiting for a report from the Congressional Budget Office on the cost of the plan before a committee of 17 negotiators meet to approve the bill and send it to the House and Senate for final votes. Some Republican lawmakers have expressed concern about the legislation’s cost. Representative Bill Thomas and Senator Charles Grassley, Republicans who led negotiations on the bill, said they expect the Congressional Budget Office to say the plan will probably cost less than $400 billion over 10 years. The bill faces opposition from Democrats who say it may undermine Medicare, the federal program for 41 million elderly and disabled Americans. Competition ``It’ll encourage more and more people to get out of traditional Medicare,’‘ Stanley Abrams, a Calpers board member and chairman of the fund’s health benefits committee, said during today’s meeting. ``I find that very disturbing.’‘ The bill relies on insurers such as Aetna Inc. to administer the new prescription benefits and includes a program to test competition between Medicare and private plans. Thomas, a California Republican, led the Medicare negotiations and supports the compromise. Aetna also endorsed the bill. U.S. Health and Human Services Secretary Tommy Thompson, former Republican governor of Wisconsin, said he is trying to win the endorsement of the National Governors Association, which hasn’t taken a position on the legislation yet. The Democratic governors’ group criticized the legislation this week, saying the federal government wouldn’t absorb enough of the costs of the Medicaid program. Medicaid is the health- insurance plan for the poor that is funded by the states and the federal government. About 6 million seniors are enrolled in both Medicare and Medicaid. No Relief Under the compromise, states would pay more than 90 percent of the drug costs for poor seniors over the next five years, the Democratic governors’ association said. States would permanently pay 75 percent of the drug bills and would also pick up the full expense of medicines not covered by Medicare’s new drug plan. ``To the extent states are expecting some relief, they’re not getting it,’‘ Vachon said in a telephone interview. ``That puts pressure on potential reimbursement for anyone serving the Medicaid population’‘ including hospitals and doctors.