How Obama And McCain Differ On Medicare

To help you make an informed decision in the presidential election, CBS News is devoting a large part of our broadcasts until Nov. 4 to telling you where the candidates stand on major issues - from the war in Iraq to health insurance to education … and a lot more. Each piece is an in-depth look at the issues facing the 44th president.

In this installment, CBS News correspondent Nancy Cordes reports on how the proposed Medicare policies of Barack Obama and John McCain would affect you and your community.

The Issue

Ruth Louise Schindle owes her life to a government program she never thought she would even need.

"I am 88," she said. "I've had cancer, I have heart problems and I go to dialysis."

She takes 11 different drugs. Her monthly medical bills are in the thousands - paid for, mostly, by Medicare.

"Where would you be without Medicare?" Cordes asked.

Schindle said: "Only God knows that. I don't know."

She lost her private health insurance in 2003, after the once-mighty Bethlehem Steel, her late husband's lifelong employer, went belly-up.

"It's just like pulling the rug out from under ya," Schindle said.

But for her daughters, Medicare is a mixed bag.

Ruthie Schindle signed up two years ago, when she became eligible at 65.

"I thought Medicare was just gonna take care of everything," she said.

She was stunned by the 20 percent co-pays.

"Everybody that has worked, has paid into the system and the fat cats get fatter - where's all this money going to?" she asked.

Mostly, it's gone to pay the rising cost of health care.

Medicare spending has increased 40 percent in the past four years - from $309 billion in 2003 to $431 billion in 2007.

At this rate, the trust fund for Medicare "Part A," which covers hospitalizations and is funded by payroll taxes, is set to go broke by 2019.

That's right around the time Ruthie Schindle's 56-year-old sister, Donna, becomes eligible.

"It might not be there! You know, you just never know," she said.

What can you do to prepare for that possibility?

"Just do a lot of praying," Donna said.

Jump down a generation, and 38-year-old Debbie, who handles most of her grandmother's Medicare bills, is even more pessimistic.

"Medicare is obviously going to have a new face when I get there and I know that," Debbie said.

Debbie said she doesn't understand where Barack Obama and John McCain stand when it comes to Medicare.

Donna added: "No. They keep flippin', changing the subject."

The Candidates

Both Sens. Barack Obama and John McCain concede Medicare is in trouble.

"By 2019, there will be no money left!" McCain has said.

He blames bloated bureaucracy. Arguing doctors and clinics should get lump-sum payments for quality care, instead of being paid for individual tests and treatments.

"What about the idea of saying, 'OK,' to a healthcare provider. 'A heart transplant is going to be based on the overall outcome and care that you provide for that patient,'" he said.

Obama sees waste in the private plans that contract with Medicare to manage the treatment of a quarter of its recipients - about 10 million seniors. Studies show those plans cost the government roughly 13 percent more than traditional medicine.

"It doesn't help seniors get any better. It's not improving our health care system. It's just a give-away," Obama said.

A major area of contrast is prescription drug coverage, also known as Medicare Part D, which Congress passed in 2003. McCain opposed it then, saying "we didn't have a single way of paying for it."

Now he argues Medicare could save $2 billion a year by making wealthier recipients - say, those making more than $80,000, pay for a larger share of their own drugs.

"People like Bill Gates, Warren Buffett, don't need their prescriptions ... underwritten by taxpayers," McCain said.

Obama, on the other hand, wants to authorize Medicare to negotiate with pharmaceutical companies to bring down drug prices - like the Veterans Administration does. He also thinks Medicare could save in the long run by covering more preventative care up front.

"I mean we will decline to give reimbursements for you to go to a dietician to lose weight, but we'll pay the $30,000 for the foot amputation when you get diabetes," Obama said.

The Impact

So, what would all those changes mean for Ruth and her family?

Allowing Medicare to negotiate with the drug giants, as Obama proposes, would likely lower prices, and, in turn, Ruth's expenses. For example:

Medicare currently pays $82 a bottle for her heart drug, Diovan. That's nearly double the negotiated price the VA pays.

"What do you think about the fact that Medicare can't negotiate currently with the drug companies?" Cordes asked.

"I think it stinks! I think they should be able to," she said.

The McCain campaign says its proposal to charge wealthy Americans more for prescription drug coverage would only impact the richest 5 percent - not the Shindle family.

Welcome news to a woman whose premiums are rising - fast.

"In 2005, for example, she was paying $153 a month for her supplement for health care," Debbie said.

And in 2007, she was paying $176.50. Now this year the fee has gone up her premium has gone up to $184.25 a month.

When it comes to patient care the family worries that McCain's idea to pay for treatment with one lump sum, rather than per visit, would limit their treatment options.

And they like Obama's plan to pay for prevention.

"Get it before you're too sick to take care of it. So I would have to go with Obama on that," Donna said.

Whoever wins, experts say, the next president can't afford to wait until his second term to fix Medicare's finances.

Not with the first of 78 million baby boomers set to become eligible in the next two years.

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    Nancy Cordes is CBS News' congressional correspondent.