Breaux, Frist Unveil Two Medicare Plans

Amid a "favorable climate," Sens. John Breaux (D-La.) and Bill Frist (R-Tenn.) yesterday unveiled two versions of a "centrist" proposal -- called Breaux-Frist I and II -- that would "modernize" Medicare and add a prescription drug benefit to the program, the Baltimore Sun reports. Breaux-Frist I, the more "comprehensive" proposal, would fully overhaul Medicare, allowing seniors to select from a number of competing private insurance plans, as well as the current fee-for-service package, and provide prescription drug coverage to all beneficiaries. To control costs, the government would provide a fixed subsidy for each beneficiary, while patient premiums and co-payments would "vary by income." Under Breaux-Frist II, patients also would receive a drug benefit, but this version would offer a prescription benefit through the traditional Medicare program and would take more incremental steps to "overhaul" the entire Medicare program (Hosler, Baltimore Sun, 2/16). The prescription drug coverage plan would cost $163 billion over 10 years, according to the Congressional Budget Office (McQueen, AP/Nando Times, 2/15). Both Breaux and Frist served on the 1999 National Bipartisan Commission on the future of Medicare, which failed to reach consensus on formally recommneding a similar plan to Congress. But citing a "changed political climate," Breaux said that "prospects have improved" this year for overhauling Medicare (McKinney, Baton Rouge Advocate, 2/16). "I think we have a unique opportunity for comprehensive Medicare reform to have a realistic chance of being adopted in this Congress," he added. Still, he and Frist admitted that the more "ambitious" Breaux-Frist I would not likely pass this year (Baltimore Sun, 2/16). "We don't know if we will have the courage in six months to a year to do the major structural reform we have got to do," Frist said, calling the approval of a universal Medicare prescription drug benefit "more likely." Frist plans to discuss both proposals with President Bush (AP/Nando Times, 2/15).

According to Sen. Chuck Grassley(R-Iowa), chair of the Senate Finance Committee, the panel that handles Medicare policy, the Breaux-Frist proposals will provide a "starting point" for negotiations on Medicare reform (USA Today, 2/16). "I'm committed to crafting legislation that both modernizes Medicare and provides affordable drug coverage," he said, but he added, "A fundamental restructuring of Medicare is probably more than can be accomplished in a year" (Rovner/Fulton, CongressDaily, 2/15). In addition, he warned, "We will achieve nothing by adding a drug benefit [to Medicare] that effectively bankrupts the program," adding that the Senate Finance Committee would likely "have a bill ready" by August (AP/Nando Times, 2/15). Meanwhile, Democrats "generally oppose" the larger Breaux-Frist package, arguing that the plan would establish a "de facto voucher system" and force seniors to "fend for themselves" in the private insurance market. "I don't trust insurance companies. They are out to make a profit. I don't think that necessarily leads to the best health care," Rep. Benjamin Cardin (D-Md.) said (Baltimore Sun, 2/16).

On Capitol Hill yesterday, both the Senate Budget Committee and the House Energy and Commerce health subcommittee held hearings on Medicare reform. During both hearings, former HCFA head Gail Wilensky and Kathy Means, head of the Senate Finance Committee health staff in the 106th Congress, said that lawmakers should not add a prescription drug benefit to Medicare "in the absence of more serious structural reforms." Wilensky concluded, "As important as prescription drug coverage is, Medicare needs to be reformed as well." However, Marilyn Moon of the Urban Institute said that a drug benefit could serve as an "important stepping stone to broader reform" by reducing seniors' "need" for supplemental coverage and lowering the incentive for private plans to "pick off" healthier beneficiaries. "Competition will work much better if the basic plan that all must offer is sufficiently comprehensive and standardized," she said. In the House hearing, Diane Rowland of the Kaiser Family Foundation urged lawmakers to reject Bush's "immediate helping hand" prescription drug coverage plan, which would provide $48 billion to states over four years. "Variations across states in existing coverage and the limited reach and scope of most state pharmacy assistance programs perpetuates uneven coverage for low-income Medicare beneficiaries based on where they live," she said. During the Senate hearing, Urban Institute President Robert Reischauer said "not to take any cost estimates of a drug benefit too seriously -- because they inevitably will go up." He also predicted that even the "most generous" prescription drug benefit proposals "will be politically unsustainable" because they remain "so much less generous" than private insurance plans. "That is not a prescription drug plan that most working Americans would find acceptable," he said (CongressDaily, 2/15).

Meanwhile, some lawmakers argued that Bush's 10-year, $1.6 trillion tax cut proposal would hurt Medicare reform efforts. "His tax cut is so big that he leaves no money to pay for a new prescription drug benefit without using the Medicare trust fund," Senate Budget Committee ranking member Kent Conrad (D-N.D.) said (AP/Nando Times, 2/15). Under a Democratic plan, lawmakers would allocate $2.9 trillion of the projected 10-year, $5.6 trillion surplus for debt reduction and use the remaining $2.7 trillion for tax cuts, additional debt reduction and a Medicare prescription drug benefit. "We say you can have a tax cut plus a prescription drug benefit," Senate Minority Leader Tom Daschle (D-S.D.) said (Fram, AP/Chicago Tribune, 2/15).