The new Medicare Act provides that for “no more than $30 a year,” a beneficiary will have a drug discount card giving discounts ranging from 10-25%, which critics say even that paltry discount is wildly inflated.
That’s OK. You don’t have to buy the card. However, the new Act also provides that Medigap policies will be barred from offering a drug benefit beginning in 2006. I have a Medigap policy that provides quite a bit more than 25%. Actually, the only medicine I currently buy is Flomax, which costs me about $650 a year, which is also the approximate cost of the drug benefits of the new Act without the card ( $35 a month and a $250 deductible: $675 a year, but providing for the eventuality that I may need additional drugs.)
So what I have now is better than what Medicare will give, and the downside is that I will lose my drug discount. Hey, thanks a lot Republicans for this great new drug benefit, which benefits only the providers (but that’s a topic for GD). My question is how can the federal government prohibit a private company from offering a type of insurance, which in all other respects is lega?
The law doesn’t prohibit companies from offering a drug plan. It just prohibits individuals from using both that plan and Medicare’s. If you choose to use the Medigap plan, then you can’t use the Medicare plan, and vice versa.
In theory, it’s no different from duplication of coverage clauses in contracts. I can’t see the slightest constitutional issue with it.
But the restriction is one that screws a lot of people who have to choose between a poor but weak benefit against a so-so but expensive ones.
And it guarantees drug companies remain among the most profitable in America.
Just off the top of my head, maybe the Necessary and Proper Clause? If Congress can show that restricting Medigap is rationally related to acheiving the purpose of the expenditure of federal funds under Medicare, the legislation would be Constitutional.
Or, the Spending Clause itself. I think Medicaid and Medicare funds are distributed to the States for redistribution to providers, and States are given discretion on how payments are scheduled. Maybe the receipt of a portion of federal Medicaid funds is contingent on the states’ restriction of Medigap.
tends to make me think the Necessary and Proper Clause is the culprit. Congress often uses it in conjunction with the Spending Clause to do things it couldn’t ordinarily, like regulate the conduct of third parties who aren’t recieving the funds, if it can show that the legislation is “rationally related to achieving the efficacious expenditure of federal funds”. So is it Constituional? My WAG is yeah, probably. I have no idea how the stated purposes are supposed to be related to the expenditure, but federal courts have upheld N&P legislation that seemed shakier than this, like criminal penalties.
Still, only way to know for sure is for someone to take it to the federal courthouse…and you, my good sir, appear to have standing!
From the way I understand it, Medicare is not a mandate, and if it’s not a mandate, the federal government can do whatever it wants. Let me explain. The federal government offers Medicare to those who want it. No one is forced to take it. That being the case, the federal government can put whatever restrictions it wants on the use of that money (barring, of course, activities banned by federal law, such as racial discrimination). Since the federal government isn’t forcing anyone to do anything, there is no Constitutional problem. After all, it’s merely a voluntary program and if someone doesn’t like the new rules, then he or she can simply refuse to participate.
At least that’s my interpretation of the issue. I used to work on education issues in the Senate, and that’s the way federal education funds worked. There were always people screaming about “unfunded mandates” regarding the No Child Left Behind Act. Well, there were no mandates in the bill. The bill simply authorized federal money to be spent and then said if states and school districts want that money, here’s what they have to do and here’s what they are prohibited from doing. If you don’t like the rules, you don’t have to take the money. A lot of federal programs work like that, and as such there aren’t any Constitutional issues. The federal government is simply offering money to states, local governments, or individuals and it is not forcing anyone to do anything.
Renob: that’s not exactly how it works, or at the very least, not how it’s working here. Congress can regulate through the Spending Power under certain conditions by attaching strings to the receipt of government funds, but that only applies to the recipient of the funds, not to third parties who don’t receive funds. This legislation restricts third parties, namely private insurers, from offering “Medigap” insurance that covers what Medicare doesn’t. Congress can’t make receipt of federal funds contingent on certain conditions to private insurers who don’t receive them in the first place, but it can regulate those insurers under the Necessary and Proper Clause if they’re behaving in a way that makes the expenditure of federal funds less efficient.
Even when the money is being given to a state or local governement and is contigent on the recipient following certain rules, there are Constitutional issues and limitations. For example, the amount contingent on the condition being followed musn’t be so high as to be coercive, and the condition must be related to the federal interest for which the funds are being made available. SCOTUS has ruled that making 5% of federal highway funds contingent on states passing a 21 drinking age in constitutional, in that the amount isn’t so high that “pressure turns into compulsion” and raising the drinking age will supposedly reduce highway fatalities. South Dakota v. Dole, 483 U.S. 203 (1987).
Thanks, pravnik, for the analysis. The N&P clause appears to be applicable. I should have known that the federal lawyers would have looked at the Constitutional aspect before the enactment, which doesn’t mean that they are right. This would be a good basis for a class action.
BTW, altho Medicaid’s funds are distributed to the states for re-distribution, Medicare funds are not. The Medicare Act provides for a fiscal intermediary which oversees the distribution of the funds.
