President Bush Asks Pharmaceutical Companies To Support Medicare Reform
President Bush yesterday asked drug makers to support a congressional effort to create a Medicare drug benefit, noting that under his "vision" for Medicare reform, the government would not mandate which medicines would be covered, the Wall Street Journal reports. Speaking at the Biotechnology Industry Organization's annual conference in Washington, D.C., Bush sought to reassure drug makers that are concerned that Medicare reform could result in price controls, saying that he believes the legislation that Congress will approve this year would call for a drug benefit to be administered by private health plans, not the federal government, the Journal reports. He said, "We need to keep rewarding innovation and protecting competition without unnecessary intervention by the government. ... When the government determines which drugs are covered by health insurance and which illnesses are treated, patients face delays and inflexible limits on coverage" (Lueck, Wall Street Journal, 6/24). Bush also "renewed his call" for increasing the participation of private health plans in Medicare, the Washington Post reports. He said Medicare would be more effective if "health plans compete for [beneficiaries'] business and give them the coverage they need, not the coverage that a Washington bureaucrat thinks they need" (Goldstein/Dewar, Washington Post, 6/24). Bush urged lawmakers to "take a tough vote, if need be, to modernize a system which needs to be saved," the New York Times reports. He said, "If we finally put aside partisan politics and focus on what's right for American seniors, I believe we can achieve the goal this year" (Toner/Pear, New York Times, 6/24). Bush's comments, while not advancing his "stance significantly beyond a general framework for Medicare that he set forth last winter," represent "a strategically timed presidential nudge," as the House and Senate prepare to pass legislation to reform Medicare and add a prescription drug benefit to the program later this week, according to the Post.
In Senate debate yesterday, lawmakers disagreed on funding for their chamber's plan (Washington Post, 6/24). The Senate bill (S 1) calls for increased participation by private plans in Medicare and would give all beneficiaries an equal drug benefit beginning in 2006. Beneficiaries would pay a $275 annual deductible and an estimated $35 average monthly premium for the drug coverage, which they could obtain by remaining in traditional Medicare and enrolling in a stand-alone private drug plan or by choosing a new coverage option called "Medicare Advantage." Either way, beneficiaries 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. Under the new coverage option, 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 government itself would provide a drug benefit through a contractor only in areas in which drug-only health plans decide not to participate (California Healthline, 6/23). The Congressional Budget Office has said the Senate plan would cost $388 billion over 10 years; both the House and Senate have approved $400 billion over 10 years for Medicare reform. Senators have been debating how to spend the $12 billion they have not yet allocated, the New York Times reports. Sen. Charles Grassley (R-Iowa), who wrote the Senate bill along with Sen. Max Baucus (D-Mont.), said that Republicans favor using $6 billion to provide subsidies to employers to continue to offer drug benefits to retirees. Grassley said Senate Republicans want to use the remaining $6 billion to "enhance competition" among private Medicare plans. Grassley said that under the proposal, the HHS secretary would select regions in which the government would encourage competitive bidding among private health plans. Medicare payments for those plans would be set based on the bids, not on formulas set by federal law or regulations, according to the New York Times (New York Times, 6/24). However, Sen. Edward Kennedy (D-Mass.) said he "object[ed] strongly" to the proposal unless lawmakers also would allocate an equal amount of money to enhancing traditional, fee-for-service Medicare (Espo, AP/Las Vegas Sun, 6/23). Kennedy said, "The foundation of the bipartisan compromise (on the bill) is a level playing field between Medicare and private plans. What conservative Republicans are trying to do is rig the system in a way that would coerce senior citizens away from Medicare and into private plans" (Washington Post, 6/24). Sen. Mitch McConnell (R-Ky.) said, "Some people would like a lot of reform. Some people would like a little reform. The notion that we could get through by satisfying everyone is not realistic."
Senate Democrats offered a series of amendments that would make Medicare benefits more generous and partially eliminate the gap in drug coverage between $4,500 and $5,800 (AP/Las Vegas Sun, 6/24). Democrats also postponed until today a vote on a proposal by Sen. Jeff Bingaman (D-N.M.) that would eliminate a proposed "assets test" for drug benefits. Under the assets test, some low-income beneficiaries would lose some of their drug subsidy if they have cars, insurance policies or other assets worth more than $4,000 for an individual or $6,000 for a couple, excluding homes (Washington Post, 6/24). In addition, Sen. Lincoln Chafee (R-R.I.) yesterday said he is likely to propose an amendment that would gradually alter the Medicare eligibility age from 65 to 67. McConnell said he expects the Senate will approve a reform package by the end of the week.
The AP/Sun reports the debate over reform legislation is expected to be "considerably more partisan" in the House, where Republicans drafted that chamber's proposal "with little, if any, consultation" with Democrats (AP/Las Vegas Sun, 6/24). The House plan calls for beneficiaries beginning in 2006 to have access to a stand-alone drug 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. The amount that a beneficiary would pay before qualifying for catastrophic coverage would be determined on a sliding scale based on income. Individual beneficiaries with annual incomes of $60,000 or more would have to pay more before catastrophic coverage began. Most beneficiaries would qualify for catastrophic coverage after spending $3,500 out of pocket per year. The 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 bill also would establish direct price competition between traditional Medicare and private health plans beginning in 2010 (California Healthline, 6/23). Reps. Rahm Emanuel (D-Ill.) and Gil Gutknecht (R-Minn.) today are scheduled to unveil an amendment that would increase access to less-expensive generic medications and allow reimportation of U.S.-made prescription drugs from 25 foreign nations, including Canada and Mexico. The amendment would also require drug companies that develop products with federal research money to pay the government a portion -- perhaps 10% -- of their profits (Wall Street Journal, 6/24). GOP aides said that House leaders are concerned that the competition clause in the House bill could be weakened during lawmakers' efforts to reconcile that chamber's bill with the "more moderate" Senate bill, the AP/Sun reports (AP/Las Vegas Sun, 6/24). The New York Times reports Bush is expected to meet with some House conservatives to discuss their concerns over creating a drug benefit without changing the structure of the program as significantly as they wish (New York Times, 6/24).
AARP has sent a letter to senators, calling on them to make their bill "more appealing" for seniors, the Journal reports. The group's concerns include the gap in drug coverage between $4,500 and $5,800 and ensuring that people eligible for both Medicare and Medicaid would have access to the Medicare drug benefit. AARP President William Novelli said, "Much has been accomplished, but more needs to be done" (Wall Street Journal, 6/24). NBC's "Nightly News" yesterday reported on the AARP letter. The segment includes comments from AARP Policy Director John Rother and Urban Institute senior fellow Marilyn Moon (O'Donnell, "Nightly News," NBC, 6/23). The full transcript of the segment is available online. The full segment is available in Windows Media 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.