The nursing home stakes in the Medicare prescription debate.

President George W. Bush was elected with a promise to replace the partisan deadlock between the two major parties by taking a cooperative approach to policy making. One area in which this promise held a real opportunity for coming to pass was the pharmaceutical benefit for Medicare. Both political parties recognized that new medications to control chronic diseases of aging have replaced hospitalization as one of the two largest costs of geriatric healthcare (the other being long-term residential care). Both presidential candidates and most congressional candidates promised to enact the benefit quickly, and George W. Bush made his proposal a key component of the State of the Union Address in January 2003.

There should have been plenty of opportunity for compromise to make this goal achievable.

The reality, of course, has been that the details of the Medicare medication benefit triggered continued partisan conflict, and if a bill is enacted by the time this article reaches press, it won't have been without a great deal of battlefield fire and smoke. Much of this will have obscured nursing homes' true stakes in the debate.

The Republicans, in particular, have been boxed in by a series of difficult dilemmas:

1. The costs of newly enacted tax changes, sluggish economic growth, and the price tag of recent U.S. interventions abroad mean that a medication benefit for all Medicare beneficiaries will add to a rapidly growing deficit that disturbs many conservatives.

2. The President's original plan called for a medication benefit to be offered only to Medicare beneficiaries enrolled in a managed care plan, despite general public distrust of managed care.

3. Several political polls have shown that the largest erosion in popular support for the President and for Republicans in general has occurred among Americans over 50 years old--a voting bloc large enough to swing the 2004 elections in Florida, California, Arizona, and several states in the Midwest and New England. A failure to pass a Medicare medication benefit with Republicans in control of both Congress and the White House could further damage this support.

Given these realities, the President and his allies in Congress were expected to offer serious concessions to the Democrats to enact a prescription benefit this year. There are several reasons why these concessions did not emerge, at least as of late fall. House Republicans, in particular, have been unwilling to share power with the Democrats, despite the near-even division between the two parties in that chamber. Congressman Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee responsible for Medicare legislation, has a reputation for being unusually disdainful of allowing the Democratic minority to contribute to the legislative process. When the House sent negotiators to iron out differences between the versions of a prescription benefit passed by the two chambers in August, Thomas included no Democratic congressmen among the conferees. The Republican majority in the Senate, in contrast, sent two Democratic colleagues to assist in negotiating a compromise.

The basic reason for the lack of a compromise, however, has been the vast ideologic gulf between the White House and the congressional Democrats on key proposals to change Medicare. Several of these have important implications for the long-term care field.

The Democrats--and many Senate Republicans--wanted the Medicare prescription benefit to be available to every Medicare beneficiary. Every Medicare beneficiary in a given nursing home could, therefore, receive the same prescriptions at the same costs. In contrast, the White House insisted that the prescription benefit should not be available to Medicare beneficiaries who also receive Medicaid benefits. The administration wants state governments to pick up the cost of prescriptions for all patients who qualify for Medicaid. Since roughly half of all nursing home residents receive Medicaid, the White House position would split medication coverage between those nursing home residents receiving coverage through Medicare only and those receiving coverage from Medicaid. As a result, some residents might not be permitted by their funding sources to receive the same medications for identical conditions.

Moreover, by forcing state governments to absorb the cost of medications for the poor, the White House approach cuts into the amount of Medicaid funds that states have available for nursing home stays. The Senate proposal, in contrast, frees the states from paying the full cost of prescription drug coverage for Medicare-eligible Medicaid patients and makes more Medicaid funds available for other purposes--such as nursing home reimbursement.

The other ideologic gulf on Medicare reform that affects nursing homes concerns whether Medicare is a universal insurance program for all of the elderly or a welfare benefit that should include income-based penalties and restrictions. Congressman Thomas has strongly advocated Medicare-as-welfare, arguing that Medicare should charge higher copayments for services based on income. The Republican House negotiators on the Medicare prescription benefit legislation similarly offered in October a proposal to effectively charge higher premiums for Medicare beneficiaries who do not want to join a managed care plan. For nursing homes, one concern is that a Medicare Preferred Provider Organization (PPO) may not reimburse a SNF that is outside its provider network.

Most of the discussion over these issues has been hidden from public view, and both sides throughout the months of debate have used vague, emotionally charged language to explain why compromise was unacceptable. The White House, for example, issued statements calling its positions necessary to achieve "an affordable benefit" that "offers real choice to seniors" and limits government intervention in the market. Those who thought otherwise were, in so many words, losers.

Whether the public decides it has won or lost remains to be seen. But it is already clear that the real losers in the debate have been healthcare providers, including long-term care facilities, who have not been made fully aware of their stakes in the poorly explained competing proposals to reform Medicare.

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