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Hassle-Free Health Coverage: Government Programs

Though there's debate about the condition of the health care industry and the possible need for national health care, America already has a program of "national health care." This social insurance program is made up of Medicare and Medicaid.

Americans remain stubbornly ill-informed about Medicare...and they expect more from the system all the time. Fewer than 25 percent think Medicare is headed for a crisis, while nearly 30 percent think the program has only minor problems or none at all. Roughly two-thirds are eager to expand Medicare -- to cover prescription drugs and long-term home care and to serve 62- to 64-year-old seniors. These changes would send the program into insolvency even sooner than 2008.

Still, toward insolvency it goes. A 1998 study released by the Office of Inspector General (OIG), Department of Health and Human Services, found that seniors are losing interest in managed care. Although awareness of HMOs among seniors increased from 70 percent to 79 percent from 1995 to 1997, those who said they might join one declined from 35 percent to 23 percent. Only 40 percent said they'd even listen to information about managed-care options -- down from 64 percent in 1994.

So much for the federal government's ability to market Medicare options.

In 1997, Congress created Medicare+Choice, a program that was to give seniors several alternatives to standard fee-for-service and HMO Medicare. But the program didn't work out as planned. At the end of 1998, some 40 managed-care plans had pulled out of Medicare. (Two or three a year was the historical average.)

More than 400,000 seniors were affected by managed care's pullout; as many as 50,000 beneficiaries were left with no HMO option at all. So, maybe it was a blessing in disguise that only 20 percent of seniors eligible for Medicare+Choice have even heard of the program.

The managed-care industry blames the government for this. "There are structural problems -- payments, compliance and transition issues -- that need to be addressed with the Medicare+Choice program," said Karen Ignagni, president and CEO of the American Association of Health Plans. "Decisive steps can and should be taken now to prevent this situation from having an even greater impact on Medicare beneficiaries."

If all of this weren't enough, the politicians are constantly on the prowl for new problems. In late 1998, windbags from both parties were interested in a new Medicare outpatient prescription drug benefit, seen as the biggest gap in Medicare coverage for seniors. Senator Ted Kennedy planned to introduce a drug benefit bill financed by new tobacco taxes. But Republicans were leery, due to the high cost of the benefit.

The Congressional Budget Office estimated that a Medicare drug benefit capped at $725 a year would cost $216 billion during the eight years from 2000 to 2008. So, insolvency would come almost a quarter-trillion dollars sooner.

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