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News Intelligence Analysis
Originally published in NEWSDAY
POLITICS AND THE ELDERLY
Down Goes Their Clout
The new Medicare law could leave the AARP toothless and the elderly
upstaged by business lobbies
By Andrea Louise Campbell and Theda Skocpol
November 30, 2003
America's elderly had high hopes for a new prescription drug benefit this year. As Congress was getting down to work in June, a Kaiser Family Foundation poll found that 63 percent of seniors wanted a seamless benefit added to traditional Medicare, comparable to the best that retired workers get. Eighty-nine percent wanted the federal government to negotiate lower drug prices with pharmaceutical companies - and a majority continued to favor this even after researchers presented the counter-argument that it could hurt research and development.
The Republican-shaped prescription drug legislation just pushed through Congress looks nothing like this. The new drug benefit has large gaps and is secured through private insurance. Remarkably, the law forbids the federal government from bargaining over lower drug prices, while channeling generous new subsidies to insurance companies, drug companies, doctors, hospitals and employers. The cost of senior medical care may soar as a result.
So why would the AARP, which counts nearly half of Americans 50 and older as members, many of them over 65, endorse this legislation, which is so far from what the elderly want? It's an important question, because the answer is connected not just to the future of the AARP but to the political clout of elderly voters generally, now and in the future.
Critics allege that economic calculations drove the AARP's endorsement, that the group hopes to cash in on the new legislation through the insurance and drug products sold under its name. But something more subtle is also going on. AARP's growing reliance on many kinds of commercial income means reduced dependence on membership dues and, in turn, reduced responsiveness to senior opinion.
In the 1990s, the AARP board under previous chief executive Horace Deets set a goal of receiving more than half its income from membership dues. But, since 1994, the share of income from dues has declined from 38 to 30 percent.
Furthermore, despite efforts since the 1980s to encourage grassroots activities and local chapter meetings, only a tiny fraction of AARP members do more than sign up to receive discounts and mailings. AARP lacks an organizational structure that integrates local and national levels in a manner that canvasses rank-and-file opinion and funnels it to the top. This gives the national staff great freedom to maneuver and has them focused primarily on responding to insider opportunities in Washington.
One reason for embracing the Republican Medicare bill, surely, was to establish a cooperative working relationship with the party that now controls the White House and both houses of Congress. Another factor is the worsening federal budget crunch. AARP leaders no doubt thought they ought to take the $400 billion on the table, for fear that any sort of prescription drug breakthrough would be hard to obtain in the future.
But the AARP has taken a large risk in the process. A look at history is instructive. In 1988, Congress passed the Medicare Catastrophic Coverage Act (MCCA) - at that point the first expansion of the program since its inception in 1965. The Catastrophic Coverage Act capped out-of-pocket costs for acute care services and provided other benefits, including mammograms and prescription drug coverage (with a high deductible). To make the program "deficit neutral," it was financed not by general tax revenues, but by an increase in Medicare premiums for all seniors, plus a supplemental premium for the most affluent 40 percent. AARP endorsed the bill, assuring lawmakers that seniors supported the legislation.
But protests began immediately after the law passed in July 1988. High-income elderly objected to paying again for benefits they already had through former employers or private insurance. Low-income seniors, who would have benefited from the bill, opposed it as well, fearing that they too would be subject to the maximum $800 surtax. Besides, since only a tiny fraction of seniors ever face the catastrophic acute care costs the program protected against, it seemed a lot to pay for little benefit.
Faced with a senior revolt, Congress took the highly unusual step of repealing the law 17 months after its passage. For years afterward the AARP was a toothless player on Capitol Hill, because legislators were not sure they could trust the group to represent elderly opinion.
The current Medicare legislation is in some ways less vulnerable to an immediate backlash. Drug benefits begin early, with discount cards to be available for purchase before the 2004 presidential election. When the legislation is implemented in 2006, seniors will pay a flat premium and supposedly receive a universal benefit.
However, elderly at every income level have something to fear. Many low-income seniors will lose their more generous Medicaid drug coverage. High-income seniors will be charged higher premiums for "part B" Medicare benefits they already receive for doctor visits and outpatient care. Middle- and high-income seniors are among the millions with employer-sponsored coverage who may lose it. The AARP insisted on subsidies to employers to prevent them from dropping retiree drug coverage, but many may still use the new federal program as an excuse to pull out or cut back on coverage. Finally, seniors will have to pay premiums and co-pays up to a certain level of coverage, and then pay out-of-pocket for drug costs between $2,250 and $3,600 per year. Many will receive little or no net benefit - and this could come as a shock.
The early signs for AARP are not good. The group has been excoriated on editorial pages, with its commercial projects made much more visible and questions raised about how well it speaks for the elderly. AARP's own message boards are rife with backlash. At the very least, the association now faces considerable bitterness and division in the ranks of its adherents.
If enough members become angry, the AARP could see its credibility in Washington diminish all over again. The organization has already alienated leading Democrats who regularly advocate for elderly interests and, if legislators become convinced that many of their senior constituents disagree with AARP, this could strengthen the hands of other elder organizations or simply lead legislators to rely on polls and constituency feedback.
Earlier this year, AARP seemed to have reemerged as a credible advocate with backbone, when it pledged not to endorse the drug legislation without significant changes. Some changes were secured, but the final legislation contains many nasty surprises.
Beyond AARP, the new legislation, as it plays out, will reshape future politics for the major political parties and for senior citizens.
Back in the 1980s, the Medicare Catastrophic turnaround didn't harm one party more than another, because both Democrats and Republicans had joined together to shape that legislation. Today's legislation is more clearly a Republican product, and President George W. Bush and his congressional supporters clearly hope it will help them steal Democrats' historic advantage on elderly entitlements.
Recent trends give them hope. The percentage of respondents in Kaiser Family Foundation polls saying that the Democrats generally do a better job of dealing with prescription drug coverage for seniors fell from 33 percent in December 1999 to 24 percent in May 2003.
Still, the Republicans continue to face risks, because the percentage saying that neither party does a good job doubled, from 16 to 32 percent. The new law contains the hallmarks of Republican approaches that seniors distrust, including future provisions designed to raise the costs of traditional Medicare for low- and middle-income seniors. Regardless of the tilt of the AARP leadership toward the Republicans - and regardless of what happens to the presidency in 2004 - if many seniors end up unhappy, Republicans could be held responsible.
Future political battles are bound to revisit many of the issues left hanging in this legislation: Will gaps in drug coverage be filled in? Will generous subsidies to for-profit interests continue as federal budgets tighten? Will the elderly really be forced to pay higher and higher premiums? Business lobbies will have an enhanced role in the future battles, but the elderly will also matter.
In the final analysis, the political influence of America's seniors does not rest primarily in the hands of the AARP or any other organization. Elders are interested and attentive citizens, constituting 25 percent of the vote in presidential contests and 30 percent of the vote in off-year congressional elections. In recent decades, seniors have had unusual clout because low- and middle-income seniors vote at higher rates than younger fellow citizens, and because seniors have tended to be relatively united in defending Social Security and Medicare.
Republican plans to build up market forces in senior health care may be more about future politics than cost controls. Research shows that HMOs and other private providers actually cost more than Medicare. Nevertheless, market subsidies may be intended to entice healthier and wealthier seniors into for-profit health plans, while leaving others in traditional Medicare.
The political effects of that could be very important if the elderly end up divided into factions with divergent interests. If more privileged elders stop supporting a strong government role in Medicare, that could make it easier in the future to shift health care costs onto individual seniors at all income levels.
The political fallout from the Medicare restructuring of 2003 cannot yet be known. But we can be sure that a lot is at stake - from the credibility of the AARP to the balance between the political parties, to the political leverage of senior citizens. Senior entitlements have been at the core of public social provision in the United States for many decades, and senior political influence has grown along with the entitlements. If entitlements are "privatized" and cut back, the political clout of seniors will dwindle too.
Copyright © 2003, Newsday, Inc.
Andrea Louise Campbell is assistant professor of government at Harvard and author of "How Policies Make Citizens: Senior Political Activism and the American Welfare State." Theda Skocpol is professor of government and sociology at Harvard and director of the Center for American Political Studies there.
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