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Home > Research Articles > Senate Committee Gives Drug Plan Quick OK

Associated Press

Monday, June 16, 2003

Associated Press - June 13, 2003

WASHINGTON - Legislation providing prescription drug coverage for millions of Medicare recipients won strong bipartisan endorsement from a Senate committee, as lawmakers sensed they finally would make good on years of campaign promises to the nation's elderly.

"The legislation has tremendous momentum. It's going to pass. It's going to be enacted. The president is going to sign it," said Sen. Max Baucus, D-Mont.

The Senate Finance Committee's bill gives private companies a significant role in Medicare, particularly in delivering prescription drugs, and the legislation would install the most far-reaching changes to the program since it was created in 1965.

It cleared the panel Thursday on a 16-5 vote. Next stop was the Senate floor, where leaders set aside two weeks for debate to start Monday. Lawmakers hoped to send President Bush a bill this summer for his signature.

"The conventional wisdom was that a Senate split almost right down the middle couldn't be expected to produce anything," said Senate Finance Committee Chairman Chuck Grassley, R-Iowa, who helped craft the measure.

Not so, he said: "We're here to deliver."

Across the Capitol, House Republicans unveiled their Medicare bill. The bills differ in detail but not at their core. The House plan would move the program much further toward a competitive model driven by the private sector, a change Republicans have long advocated and is sure to stir opposition.

For the second day running, Bush called on Congress to send him legislation.

"We've got a problem with Medicare," the president said at a Connecticut hospital. "There's story after story after story, all across America, about people wondering whether or not they can afford lifesaving drugs in their later years."

In the Senate, some Democrats protested that the bill offered a drug benefit far stingier than most working Americans enjoy, and warned Congress not to overpromise. Legislators were given $400 billion over 10 years under GOP spending plans already in place; Democrats would like more.

"Yes," conceded Baucus, "we could have done more with more money."

Seniors are expected to spend $1.8 trillion over the next 10 years on prescription drugs; the legislation moving through Congress would cover just 22 percent of that total.

The rest would continue to be paid others including seniors, retiree health plans and Medicaid, the government health plan for the poor.

Under both House and Senate bills, all 40 million Medicare beneficiaries would receive equal drug coverage, no matter what type of health plan they choose.

Both bills create a new option for Medicare recipients, preferred provider organizations, in which patients are encouraged to use doctors and hospitals in a network but may see others for an extra charge. But both chambers rejected President Bush's call to give seniors who enroll in PPOs a better drug benefit to lure them into managed care.

Estimates vary widely about how popular these PPOs will be. Their proponents hope PPOs will win business by offering extra benefits such as preventive care and a cap on out-of-pocket costs.

Ultimately, supporters believe, private plans will inject competition into the program and drive down costs, helping to solve Medicare's long-term financial problems.

With baby boomers nearing retirement, the program is projected to go bankrupt by 2026 without changes.

In a striking sign that years of political gridlock over Medicare have been shattered, the Senate's two party leaders - Sen. Bill Frist, R-Tenn., and Sen. Tom Daschle, D-S.D. - both voted for the Senate bill.

Frist did so enthusiastically, but Daschle less so, saying he hoped it could be made better. "I think it's a start, however shaky we may view that start to be," said Daschle.

Despite criticism from some Democrats, committee approval was never in doubt. The panel rejected, 14-7, an effort to limit premiums for drug coverage. And it upheld, 13-18, a provision that reversed a 1996 law that barred legal immigrants from Medicaid and the State Children's Health Insurance Program, which aid poor and low-income families.

Grassley said Friday that lawmakers may need to revisit incentives for employers to keep health care coverage for retirees after Medicare expands its benefits.

Beyond the drug benefit, both the House and Senate bills would raise the deductible on the premium for Medicare Part B, which covers doctor visits and other treatment outside a hospital.

The House bill envisions $18 billion over five years in government savings by holding down the growth in payments to hospitals.

The House also requires well-off Medicare recipients with higher drug costs to pay more in out-of-pocket expenses than others before a catastrophic coverage kicks in.

Additionally, the House bill would inject a dose of free-market competition. Beginning in 2010, it would require the national government-run health plan to compete for business with private insurance companies. If its costs are too high, the premiums will rise; that means it could cost seniors extra if they want to stay in traditional Medicare.

On the drug benefit, the House and Senate envision similar approaches, but their priorities in spending the money differ. The House would cover a larger share - 80 percent - of a seniors' first $2,000 in drug costs. Nearly two in three beneficiaries will not spend more than $2,000 in a given year, so for them, the House bill is a better deal.

The Senate picks up just 50 percent of the tab, but the help covers the first $5,400 in drug spending. People with higher drug expenses would benefit more from the Senate plan.

Copyright 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.