Bush to shake up health care

President George W Bush is expected to make health care reform the centrepiece of his domestic policy agenda when he makes his annual State of the Union address to Congress next week.

The president is expected to link the introduction of a long-promised drugs benefit for senior citizens with proposals to reform Medicare - the government programme that pays for health care to the elderly.

Under the proposals, leaked to several newspapers on Friday, senior citizens who wanted to receive help with the cost of prescription drugs would have to join medical insurance groups known as Health Maintenance Organisations (HMOs)

This could limit their access to the physicians of their choice, which could in turn help to limit the cost of a new prescription drug benefit at a time when the federal budget is under intense pressure from tax cuts, a slowing economy and the costs of war.

But it could anger the elderly, who so far have shown little inclination to join the voluntary HMOs that are already offered by Medicare.

Ongoing crisis

The problems of the US health care system have grown since former President Bill Clinton proposed a major reform in 1994 - only to have it blocked by the health insurance industry and the Republicans in Congress.

" Drug benefits must be available to all, including those who want to stay in traditional Medicare programmes "
John Rother, AARP

On Thursday, he told an audience of health activists in Washington that Americans were paying hundreds of billions of dollars too much in health care costs because of the "crazy" way the system is financed - through a combination of private health insurance (for those in work) and government support for the poor and elderly.

Over 42 million Americans of working age lack any health coverage at all, while the costs of private insurance at work have been growing at double digit rates recently - prompting the workers at the huge US company GE to go on strike.

And the huge budget crisis that is affecting many states is prompting them to cut back on the level of heath benefits available to poor people, in a programme jointly funded with the federal government.

No consensus

But if there is widespread agreement that the system is not working, there is no consensus on how to improve it.

President Bush has argued that a key element that adds to the high costs is the explosion of medical malpractice suits.

He has proposed limiting non-economic damages awarded by the courts to a maximum of $250,000.

Other political parties have come up with their own solution:

• The moderate Democratic Senator, John Breaux, has proposed that the requirement to have health insurance be made universal, like car insurance, and that the states create cheaper private group insurance plans that would be available to people who currently lack coverage

• Republicans argue that the long-term costs of the two big entitlement programmes for the elderly, Medicare and Social Security, must be capped if they are remain economically viable as the number of older people continues to grow

• But the radical Republicans in Congress are pressing for the abolition of Medicaid - the programme that helps poor people and is in financial difficulty - to be replaced by a broad block grant to the states to use as they see fit.

Elderly in revolt

The lack of coverage for prescription drugs has been a long-standing concern for the elderly, and played an important role in the political debate during the 2000 election campaign.

President Bush was forced to propose his own, more limited drug benefit plan (to be provided by the private insurance industry) after the Democrats began to make headway on the issue.

Older people are more likely to vote than any other age group, and are highly organised by lobby groups like the American Association of Retired Persons (AARP).

How to fix the broken US health care system could prove to be the biggest domestic political issue this year.

Democrats are certain to call for some of the funds now earmarked for tax cuts to be used for dealing with spiralling costs and the lack of health coverage.

And John Sweeney, the head of the AFL-CIO, the coordinating body for trade unions, told BBC News Online that his members would be making the issue one of their top domestic priorities.