Final Medicare Reform Bill Will Include Cap on Costs, House Speaker Dennis Hastert Says
House Speaker Dennis Hastert (R-Ill.) has promised Republican lawmakers that the final Medicare bill that comes out of House-Senate conference committee will include caps on costs, the Washington Times reports. In a June 26 letter to congressional Republicans, Hastert committed to working with conservatives to craft "a provision that provides a mechanism to ensure that the cost of the prescription drug program" in the final bill does not exceed the $400 billion over 10 years Congress has set aside for such a program. The Times reports that Hastert's promise was a "deciding factor" for some House Republicans to vote for the bill. Rep. Sue Myrick (R-N.C.), chair of the House Republican Study Committee, said, "For those of us with concerns about this bill and who want to support the president, [Hastert's promise] is very important. Without this commitment many of our group could not have supported this bill." Hastert also committed to maintaining the House provision that would require traditional fee-for-service Medicare to compete with private plans beginning in 2010. Still, Rep. Jeb Hensarling (R-Texas) said that although the 2010 competition proposal is intended to contain costs, conservatives wanted a "backup plan" to ensure that costs are controlled, the Times reports. In a meeting with President Bush and other administration officials Wednesday, Hensarling proposed adding a cost-containment amendment to the reform bill in conference. The Times reports that Bush directed HHS Secretary Tommy Thompson to "look into" several cost-containment mechanisms. "I wouldn't say there was a firm commitment there. But I think [Bush] thinks it's an idea that has a lot of merit and deserves to be explored," Hensarling said. Senate leaders said it is too early to comment on cost-containment proposals. "We'd just need to see what they have in mind before we can respond more specifically," Jill Gerber, a spokesperson for Senate Finance Committee Chair Charles Grassley (R-Iowa), said. Jay Carson, a spokesperson for Senate Minority Leader Tom Daschle (D-S.D.), said Daschle's support for a cost-containment provision would hinge on what type of mechanism Republicans propose. Carson said Democrats would be "fully supportive" of a provision that would seek to cut drug costs, but he added, "given the Republicans' track record on this issue, they're probably talking about cutting drug benefits to seniors, which is unacceptable" (Fagan, Washington Times, 7/2).
The House and Senate last week passed separate Medicare bills (HR 1 and S 1) that both would increase the participation of private plans in the program and give all beneficiaries an equal benefit. Under both bills, seniors would have access to a stand-alone drug benefit regardless if they are enrolled in traditional Medicare or in a private plan. The Senate bill calls for the government itself to provide a drug benefit through a contractor only in areas in which private drug-only health plans decide not to participate. Under the House bill, beneficiaries would pay an estimated average $35 monthly premium and a $250 annual deductible for drug coverage. 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. The amount that a beneficiary would pay before qualifying for catastrophic coverage would be determined on a sliding scale based on income. For most beneficiaries, coverage would resume once they have purchased $4,900 worth of drugs in a year, which would result in beneficiaries spending $3,500 out of pocket. Individual beneficiaries with annual incomes of $60,000 or more would have to pay more before catastrophic coverage began. Under the Senate bill, beneficiaries would pay a $275 annual deductible and an estimated $35 average monthly premium for the drug coverage. They would pay half of their annual drug costs from $276 to $4,500 and all drug costs between $4,501 and approximately $5,800. After about $5,800, beneficiaries would be required to cover 10% of their drug costs, with Medicare paying the remainder. Both bills would provide greater subsidies to low-income beneficiaries, though the approaches differ. Both bills would also create a drug discount card beginning in 2004 that could provide discounts of between 15% and 25%.
The House bill would raise the deductible beneficiaries pay for physician services and would include new preventive care coverage options, such as a free physical for each beneficiary. The House measure also would establish direct price competition between traditional Medicare and private health plans beginning in 2010. The Senate bill would create a new coverage option called "Medicare Advantage," under which private plans would offer coverage for catastrophic health expenses and preventive care services in addition to the required Medicare benefits, giving beneficiaries an incentive to move out of traditional Medicare and into a private plan. The Senate bill also calls for spending $12 billion over 10 years for two five-year demonstration projects. One would implement a new competitive bidding payment system for private plans in certain regions, and the other would pay for preventive and chronic care services under traditional fee-for-service Medicare (California Healthline, 7/1).
Difficult Conference Committee Predicted
HHS principal Deputy Assistant Secretary Dr. Cristina Beato yesterday predicted that the conference committee charged with reconciling the House and Senate Medicare bills has a difficult task, the Spokane Spokesman-Review reports. Speaking to a group of 75 seniors at a Spokane, Wash.-based nursing home, Beato said, "I think there's going to be a lot of bloodshed." Rep. George Nethercutt (R-Wash.), who organized the group, told seniors to expect "a lot of demagoguery as the House and Senate work out their differences in conference committee." However, Nethercutt added, "Segments of our system will be unhappy, but we'll be able to satisfy most objections" (Johnson, Spokane Spokesman-Review, 7/2). The Christian Science Monitor today previews the action the conference committee will take on Medicare reform, saying it "could prove to be the most difficult negotiations of the 108th Congress" (Russell Chaddock, Christian Science Monitor, 7/2).
With lawmakers preparing for an "intense, months-long" conference on Medicare reform, Senate staff members yesterday said that some other health policy issues, including Medicaid reform and efforts to address the uninsured, will be pushed back, CongressDaily reports. Senate staffers attending a forum yesterday hosted by the Alliance for Health Reform said they expect the conference committee to work into the fall reconciling Medicare reform legislation. Senate Finance Committee Minority Counsel Elizabeth Fowler said, "Progress on [Medicaid reform and the uninsured] will depend on our progress on Medicare." William Hoagland, budget and appropriations director for Senate Majority Leader Bill Frist (R-Tenn.), said, "I don't think we'll be able to address Medicaid this Congress. Maybe next." CongressDaily reports the Senate plans to take up medical liability reform in the weeks after Congress' July 4 recess (Heil, CongressDaily, 7/2).
Measures in the House and Senate Medicare prescription drug bills could reduce some health care costs for companies that provide health care to retirees through employer subsidies and for Medicare-subsidized managed care organizations with drug benefits, the New York Times reports. According to a study from Hewitt Associates for the Kaiser Family Foundation, employers will spend an estimated $22.5 billion to provide prescription drug benefits to retirees this year. Under the House bill, employers who provide drug benefits to retirees would receive a sliding subsidy after the first $250 in expenses per retiree -- about 28% of the actual cost of drugs purchased -- but the subsidy would have a $5,000 cap. The Senate bill would give employers a direct annual subsidy of $840 per retiree. Companies that pay for retirees' health benefits, such as General Mills, Ford, Verizon, SBC Communications, IBM and Caterpillar, have been lobbying to ensure that the measures remain in the final version of the bill, and negotiations between the House and Senate are expected to invoke "shar[p] debates" over how to encourage companies to maintain retiree benefits, according to the Times. However, fewer companies continue to offer health benefits to retirees, and Congressional Budget Office projections indicate that the proposed Medicare legislation likely would "accelerate that trend," the Times reports. "It is clear that employers will react by scaling back their drug coverage for retirees," Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology, said (Freudenheim, New York Times, 7/2).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.