Bush Administration Concedes on Equal Medicare Prescription Drug Benefits
The Bush administration yesterday told lawmakers it would accept a Medicare reform package that would offer beneficiaries equal drug benefits, regardless if they remain in the traditional program or join a private health plan, a provision called for in the Senate Finance Committee proposal, the New York Times reports. The administration previously insisted that any Medicare reform plan give more generous drug benefits to Medicare beneficiaries who join private health plans, which the administration maintains better control costs (Pear, New York Times, 6/10). President Bush's Medicare reform framework calls for beneficiaries to receive a choice of three coverage options beginning in 2006. First, beneficiaries could remain in traditional fee-for-service Medicare, with access to prescription drug discount cards and catastrophic protection. Second, they could enroll in "Enhanced Medicare," which would offer a choice of private plans that include prescription drug coverage. The third option, "Medicare Advantage," would be similar to the current Medicare+Choice program, which offers a selection of private health plans with and without prescription drug coverage. Low-income beneficiaries would receive additional premium and cost-sharing assistance. In the interim, all beneficiaries would get immediate access to drug discount cards and protection against high out-of-pocket costs.
By contrast, the Senate Finance Committee's proposal calls for all Medicare beneficiaries to receive a drug benefit, for which they would pay a $275 annual deductible and a $35 monthly premium. Beneficiaries would be required to pay half of annual drug costs from $276 to $3,450 and all drug costs between $3,451 and $5,300. After $5,300, beneficiaries would be required to cover 10% of drug costs, with Medicare paying the remainder. The government itself would provide a drug benefit through a contractor in areas in which drug-only health plans decide not to participate. The committee's plan also calls for a new type of coverage, called "Medicare Advantage." In addition to required Medicare benefits, private plans would offer coverage for catastrophic health expenses and preventive care services, giving beneficiaries an incentive to move out of traditional Medicare and into a private plan. Further, beneficiaries opting for private coverage would pay a $400 deductible for hospital and doctor visits, compared with $840 for hospital stays and $100 for doctor visits for beneficiaries remaining in traditional Medicare. The new plan would take effect in 2006. In the meantime, the federal government would authorize the use of drug discount cards in 2004 to help beneficiaries save money, and low-income beneficiaries would be eligible for a $600-a-year drug benefit in 2004 and 2005 (California Healthline, 6/9).
After meeting with several Republican senators yesterday, HHS Secretary Tommy Thompson said the administration is "not really at this point in time" seeking a change in the provision in the Finance Committee proposal that offers equal drug benefits (Espo, AP/Boston Globe, 6/10). Administration officials said yesterday that they were "bowing to political reality and giving up, at least for now," the New York Times reports. CMS Administrator Tom Scully said the Bush administration would not seek to amend the Finance Committee proposal to provide more extensive drug benefits to beneficiaries who join private plans. He added, "We would not do that to Sen. [Charles] Grassley [R-Iowa]. We reserve the right to push for differential benefits. But getting a bill out of the Senate is the clear goal for the president. ... The key is to keep the process moving. The worst outcome is to have no bill at all." Grassley, chair of the Finance Committee, Sen. Max Baucus (D-Mont.), the committee's ranking Democrat, and other committee members drafted the plan (New York Times, 6/10). White House spokesperson Ari Fleischer said, "What the president is focused on is getting more choices, better choices, better benefits and prescription drugs to our nation's seniors. And ... we're going to work with Congress to get it done."
James Manley, a spokesperson for Sen. Edward Kennedy (D-Mass.) said, "The president's plan to privatize Medicare is dead. This is a huge win for Democrats and senior citizens." Sen. Olympia Snowe (R-Maine) said that Congress is "on the cusp" of enacting one of "the most significant changes in domestic social programs since creation of the Medicare system." Although support for the Senate Finance Committee's reform proposal "ranges mostly from chilly to lukewarm," it appears to have enough legislative and administrative support to give it a "fighting chance," the Los Angeles Times reports. Some Senate Democrats expressed displeasure with the Finance Committee proposal but added that their only chance to change it is to "vote for a plan they dislike -- and then work to make it better" once it reaches the Senate floor, the Los Angeles Times reports. Sen. John Rockefeller (D-W.Va.) said he is considering attempting to stop the legislation on the Senate floor. Senate Minority Leader Tom Daschle (D-S.D.) said, "Democrats will continue the fight for a real prescription drug benefit by offering amendments in committee and on the Senate floor to improve this bill" (Kemper, Los Angeles Times, 6/10).
In related news, officials from the Congressional Budget Office yesterday said the Senate Finance Committee's Medicare reform proposal would cost $351 billion over 10 years, below the 10-year, $400 billion threshold that both chambers set for such proposals, the Washington Post reports (Goldstein/Dewar, Washington Post, 6/10). According to the Wall Street Journal, the lower spending estimate stems from the CBO's prediction that just an additional 2% of Medicare beneficiaries, or 800,000 people, could choose to join private plans under the proposal (Lueck/Rogers, Wall Street Journal, 6/10). Those figures are different from the Bush administration's estimates, which predict that about 30% to 40% of beneficiaries would switch to private plans, the Post reports. According to the Post, about 12% of current beneficiaries are enrolled in Medicare+Choice plans (Washington Post, 6/10). The administration also disagrees with the CBO's estimate that costs under private Medicare plans would be between 10% and 12% higher than those under traditional, fee-for-service Medicare. CMS officials say that they anticipate private plans would submit bids to offer plans with a "full range" of benefits at between 98% and 99% of what the government pays (New York Times, 6/10). Grassley said yesterday that the Finance Committee plans to use the estimated $49 billion in remaining funds for its proposal. Although Grassley declined comment on how specifically the funds would be used, several officials said they expect the money could be used in part to further "reduce the burden" on beneficiaries with high drug costs and possibly increase aid for low-income beneficiaries (Espo, AP/Las Vegas Sun, 6/10). CongressDaily/AM reports that Grassley indicated the funds could be used to reduce the gap in drug coverage, in which beneficiaries must pay 100% of drug costs. He said, "All of the money on the table goes back into the plan, and we are going to have a $400 billion drug plan when all is said and done" (Heil, CongressDaily/AM, 6/10). Grassley said he would introduce a formal version of the new plan today (Wall Street Journal, 6/10). The Finance Committee intends to vote on its plan bill Thursday, the New York Times reports (New York Times, 6/10).
House Republican leaders have agreed on a Medicare reform outline that would provide equal benefits to all beneficiaries whether they remain in the traditional program or choose a private plan, but would require a "small portion" of "relatively affluent" seniors to cover more of their drug costs, the Washington Post reports. Under the agreement, which is similar to proposals adopted by the House in the last two legislative sessions, beneficiaries could choose a stand-alone benefit for which they would pay a $35 monthly premium and a $250 annual deductible. The plan would cover 80% of beneficiaries' drug costs from $251 to $2,000 per year, after which there would be a gap in coverage before catastrophic coverage would take effect. Under a new provision not previously adopted by the House, the amount that a beneficiary would pay before qualifying for catastrophic coverage would determined on a sliding scale based on income. According to the Post, most beneficiaries would qualify for catastrophic coverage after spending $3,700 per year, but that figure would be higher for beneficiaries whose annual incomes are about $50,000 or higher (Washington Post, 6/10). The plan would cover 100% of costs once a beneficiary qualified for catastrophic coverage (Wall Street Journal, 6/10). The House Ways and Means and the Energy and Commerce committees likely will consider the bill next week. According to the Post, the proposal could increase the chances that Medicare reform legislation passes Congress because the "starting points for debate" between the Senate Finance Committee proposal and the House proposal "overlap in key respects" (Washington Post, 6/10). Senate Majority Leader Bill Frist (R-Tenn.) said that if the House and Senate reform plans meet in conference, "We'll be able to marry the two" (Wall Street Journal, 6/10). NPR's "Morning Edition" today reports on the Finance Committee's proposal. The segment includes comments from Urban Institute senior fellow Marilyn Moon, Public Citizen legislative representative Ben Peck and Scully (Rovner, "Morning Edition," NPR, 6/10). The full segment is available in RealPlayer online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.