Bush Proposes $190B Plan To Overhaul Medicare, Add Drug Benefit

President Bush yesterday announced a $190 billion, 10-year plan to "overhaul" Medicare and provide states with federal funds to offer prescription drug coverage to low-income seniors, the New York Times reports (Pear/Toner, New York Times, 1/29). The plan is detailed in a White House document, titled "President's Framework for Strengthening Medicare," an outline that the Bush administration hopes will lead to a Medicare prescription drug benefit (Lueck, Wall Street Journal, 1/29). Under the plan, the federal government would offer states $77 billion of the $190 billion to provide prescription drug coverage to low-income seniors. States could provide prescription drug coverage to Medicare beneficiaries with annual incomes between 100% and 150% of the federal poverty level, or between $11,610 and $17,415 for a couple. The federal government would cover 90% of the cost of the program. States, which would administer and determine eligibility for the program, would cover 10% of the cost. States also could provide prescription drug coverage to Medicare beneficiaries with annual incomes below the federal poverty level under the program, but the federal government would only cover between 50% and 76% of the cost for those beneficiaries depending on the "affluence" of the state (New York Times, 1/29). According to the White House, the proposal would provide prescription drug coverage for about three million low-income Medicare beneficiaries over 10 years (Connolly, Washington Post, 1/29). Bush will include funding for the proposal in his fiscal year 2003 budget, which he will submit to Congress Feb. 4.

Bush yesterday also proposed a separate plan, Pharmacy Plus, which would allow 18 states that offer prescription drug coverage through Medicaid to expand their programs to cover low-income seniors who otherwise would be ineligible for the program (Kemper, Los Angeles Times, 1/29). Under Pharmacy Plus, the federal government would allow states to operate "demonstration programs" that would provide Medicaid coverage to Medicare beneficiaries only for prescription drugs. States could provide prescription drug coverage to seniors with annual incomes up to 200% of the federal poverty level under the program (New York Times, 1/29). The Bush administration yesterday approved a Medicaid waiver for Illinois that will allow the state to use this tactic to provide prescription drug coverage for about 365,000 seniors. White House officials also predicted that more states would participate in the program (Washington Post, 1/29). However, the Los Angeles Times reports that "it is unclear how many states would be able to afford an expanded drug benefit for poor seniors, even if the federal government shared the cost" (Los Angeles Times, 1/29). The AP/Philadelphia Inquirer reports that many state Medicaid programs that offer prescription drug coverage "are now imperiled by the recession" (Carter, AP/Philadelphia Inquirer, 1/29).

The New York Times reports that the two prescription drug coverage proposals offered by Bush represent an "effort to seize the initiative on an issue highly likely to figure prominently" in the November congressional elections. "We need a comprehensive reform plan that includes prescription drugs for every senior," Bush said (New York Times, 1/29). However, according to White House documents, "Many improvements in Medicare, such as full implementation of a prescription drug benefit, will take several years to set up" (MacDonald, Hartford Courant, 1/29). Bush unveiled the prescription drug coverage proposals yesterday at a White House meeting with a bipartisan group of about 12 lawmakers. Rep. John Dingell (D-Mich.) and Sen. Bob Graham (D-Fla.) said that Bush's proposals "fell far short of meeting the need" for Medicare beneficiaries. "It's like putting a Band-Aid on a broken leg," Dingell said. Sen. Edward Kennedy (D-Mass.) added that Bush had offered "recycled proposals that fall short of meeting the urgent and growing need for a real Medicare prescription drug benefit" (New York Times, 1/29). Although Republicans agreed that the "long-term goal is to ... include prescription drugs" in Medicare more completely, Sen. Bill Frist (R-Tenn.) said that lawmakers "also have to act now" to help seniors (Los Angeles Times, 1/29). Frist added that the proposals will allow lawmakers to help seniors while lawmakers "address the much larger issue of overall Medicare modernization" (Washington Post, 1/29). Mark McClellan, a White House health policy adviser, said that Bush "remains committed" to a Medicare prescription drug benefit and will highlight the "need for a drug benefit and reform in the Medicare program" in his State of the Union address tonight (Wall Street Journal, 1/29).

In addition to the two larger proposals, Bush yesterday said that he hopes to establish two new Medigap plans that would cover the cost of prescription drugs for seniors. Although three of the 10 existing Medigap plans currently provide prescription drug coverage, the premiums "are so high" that only 500,000 Medicare beneficiaries participate, the White House said (New York Times, 1/29). Bush also said that he would still move ahead with his proposed pharmacy discount card for Medicare beneficiaries (Wall Street Journal, 1/29). In addition, Bush proposed a "big increase" in reimbursements for health plans that participate in Medicare+Choice to help "reverse their exodus" from the program (New York Times, 1/29). Bush proposed a $4 billion increase in reimbursements for health plans that offer "enhanced benefits" -- benefits that are not provided under fee-for-service Medicare -- to Medicare+Choice beneficiaries, including prescription drug coverage, disease management programs and improved preventive care services (Wall Street Journal, 1/29)