CBO Says ‘Rival’ Rx Drug Plans Are Affordable
The Medicare prescription drug plans put forth by Senate Democrats and House Republicans "are both affordable under the budget adopted by Congress earlier this year," according to a new Congressional Budget Office report, the New York Times reports (Pear, New York Times, 6/9). The report found that the "universal" Medicare prescription drug measure introduced last year by Sen. Bob Graham (D-Fla.) and former Sen. Charles Robb (D-Va.) (S 3107) would cost about $318 billion over 10 years, about $18 billion more than the $300 billion set aside by Congress in its budget resolution (Fulton, CongressDaily, 6/8). A GOP-backed plan passed by the House last year (HR 4680), which would provide drug benefits through private insurers, would cost $157 billion over the next decade, "about the same" as the amount proposed by President Bush in February. Another plan, put forth by Sens. John Breaux (D-La.) and Bill Frist (R-Tenn.), (S 358) would total $176 billion over the next 10 years. This plan, which is "favor[ed]" by Senate Republicans, would provide prescription benefits through "a range of competing health plans" (New York Times, 6/9). The cost estimates of each of the proposals has risen since last year as projections for per-capita prescription drug spending have increased (Lueck/Murray, Wall Street Journal, 6/11). But while prescription drug spending "by or for" Medicare beneficiaries is expected to total $1.3 trillion over the next decade, the government would foot the bill for no more than one-third of that amount "even [under] the most generous proposals," the New York Times reports. All of the proposals would allocate about $100 billion over the next decade to help low-income beneficiaries pay for premiums and other costs.
Senate Democrats "rejoiced" at the CBO findings, saying that the news should help them pass a Medicare prescription drug benefit similar to the Graham measure (New York Times, 6/9). The bill, which was defeated in the Senate "on procedural grounds" last year, would include a $250 deductible for beneficiaries(CongressDaily, 6/8). Low-income seniors would not have to pay any co-payments, while middle-income seniors would pay for half of their medications. Seniors with incomes of more than $75,000 per year and couples with annual incomes of more than $100,000 would pay 75% of costs (Wall Street Journal, 6/11). The government would "pick up the full tab" for any beneficiary whose drug costs rise above $4,000 (CongressDaily, 6/8). Under the Graham bill, monthly premiums would total about $53 in 2004, although they would likely rise to about $114.70 by 2011 (New York Times, 6/9). Low-income seniors would not have to pay premiums (Wall Street Journal, 6/11). The plan would control costs by "relying on competing pharmaceutical benefit managers." Senate Finance Committee Chair Max Baucus (D-Mont.) said, "Today, we have the money in our budget to enact a truly comprehensive drug benefit -- one that will guarantee coverage to all beneficiaries. We can afford to help millions cover the skyrocketing cost of their drug treatments and we can do it this year." Finance Committee ranking member Sen. Charles Grassley (R-Iowa) is "working closely" with Baucus to create a bipartisan bill that includes HCFA reform (CongressDaily, 6/8). Graham said that Democrats hope to start moving their legislation through the Finance Committee in July, and Senate Majority Leader Tom Daschle (D-S.D.) added that he "will use his new power as majority leader to push for action" on the issue (New York Times, 6/9). However, the Graham bill could face "heat" from liberal Democrats over its "version of means testing" that would require "wealthier" seniors to pay more out of pocket for premiums and co-payments (Wall Street Journal, 6/11).
House Republicans also "expressed satisfaction" with the findings, adding that the estimates "supported their contention that the $300 billion in the budget was more than enough to provide drug benefits." Under the GOP bill passed by the House last year, monthly premiums would be about $53 in 2004 -- the same as under the Democrats' plan -- but would only rise to about $92.50 by 2011 (New York Times, 6/9). Bush and GOP lawmakers hope to pass a drug benefit that involves a "greater role" for the private sector. Grassley said, "The estimates affirm that competition and private sector tools are keys to ensuring that older Americans get the most bang for their buck" (Wall Street Journal, 6/11). Both the Graham and House-passed Republican proposals "envision a role for private companies" in their plans through either price negotiations with drug manufacturers and pharmacies or strategies to "steer" beneficiaries toward lower-cost drugs. The CBO concluded that the cost-control strategies in the House Republican plan would be "much more effective" than those in the Graham bill.
Marilyn Moon, an economist at the Urban Institute, said that all of the proposals would provide a benefit package "less generous" and more costly than the ones typically offered by employers (New York Times, 6/9). The pharmaceutical industry is backing the Breaux-Frist plan. "We are encouraged. The bill is not going to be as high," Jeff Trewhitt, a spokesperson for the Pharmaceutical Research and Manufacturers of America, said (Wall Street Journal, 6/11).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.