President Bush's Medicare Framework 
Revised 5/11/2003

The President's Medicare framework is based on a zero-premium catastrophic drug benefit, a revived HMO program, and new, nationwide Preferred Provider Organization (PPO) options.  However, it is unclear whether the drug benefit would help or hurt seniors with employer-based retiree coverage or whether the new private plans would operate on a level playing field with Medicare's traditional fee-for-service program.

For several years, Congress has been gridlocked on Medicare reform and benefits modernization, including a prescription drug benefit.  The President's Medicare framework has the potential to help break the impass.  However, the framework is sufficiently vague that we don't know if its drug benefit is based on "out-of-pocket" spending (which sounds less expensive, but could create powerful incentives for employers to drop their retiree drug coverage) or total drug spending (the better approach, but also more expensive because it would effectively provide "back-stop" or reinsurance for employers or states that offer comprehensive drug benefits to retirees or low-income residents).  We also don't know if the competitive system of HMOs and PPOs that the President envisions would provide a level playing field for other types of plans, including Medicare's traditional fee-for-service program.

Centrist Policy Recommendation:  The President's Medicare Framework should be merged with the Dooley Rx bill (H.R. 1568) and the original Breaux-Frist I Medicare reform proposal from 1999 to create a premium-support system for seniors patterned after the Federal Employees Health Benefits (FEHB) program.  PPI's "Compstat" vision of accountability within the program is another essential part of real Medicare reform.

Resources
President Bush's Medicare Framework (March 4, 2003)
Breaux-Frist I Medicare Proposal and Bill
H.R. 1568 Summary
H.R. 1568 Bill Text

Centrists.Org The President's Medicare Framework:  Good Ideas, Weird Rhetoric (April 20, 2003).
Progressive Policy Institute An "ABC" Proposal to Modernize Medicare by Jeff Lemieux and coauthors (February 14, 2003).

Progressive Policy Institute Healthy Aging v. Chronic Illness:  Preparing Medicare for the New Health Care Challenge by David B. Kendal and coauthors (February 14, 2003).

Jeff Lemieux Making Chronic Care the Focus of Medicare Reform (Testimony || February 25, 2003)