Rep. Bill Thomas ‘Not Surprised’ by Higher Cost Estimate for New Medicare Law
During a House Ways and Means Committee hearing Tuesday, Chair Bill Thomas (R-Calif.) said that he is "not surprised" that the Office of Management and Budget cost estimate of the Medicare law (HR 1) is higher than the estimate from the Congressional Budget Office, CongressDaily reports (Rovner, CongressDaily, 2/10). According to OMB, the Medicare legislation will cost $534 billion over the next 10 years, $134 billion more than estimated by CBO. The fiscal year 2005 budget proposal President Bush released earlier this month acknowledges the higher estimate (California Healthline, 2/6). During the hearing, Thomas "all but admitted" he knew before the Medicare bill was passed that it would cost more than $400 billion over 10 years, CongressDaily reports. But he said it is a "tragedy" that officials have to come up with a specific number for the law "which we know is going to be wrong," adding that $127 billion of the difference in the two estimates is "an attempt to guess behavior six, eight years in the future." He estimated that the real cost of the legislation is "somewhere in the mid-400s" of billions of dollars, CongressDaily reports. Both Thomas and HHS Secretary Tommy Thompson, who testified at the hearing, said that Congress is bound to the CBO estimate. During the hearing, Thompson also responded to ongoing criticisms from some Democrats that the Bush administration's advertising campaign for the new Medicare law is misleading and that the ad agency that placed television spots for the campaign is also working for the Bush re-election effort (Rovner, CongressDaily, 2/10). The campaign includes $9.5 million in 30-second television spots to inform beneficiaries about changes to Medicare. The spots, which will appear on network and cable television stations nationwide through March, address some criticisms of the law and will be paid for out of $1 billion in federal funds set aside to implement changes to the program. At the request of some Democrats, the General Accounting Office is launching an investigation into concerns that the Bush administration is using federally funded advertisements and brochures about the new Medicare law for "political purposes" (California Healthline, 2/9). On Wednesday, Sens. Edward Kennedy (D-Mass.) and Frank Lautenberg (D-N.J.) are expected to ask Thompson to stop the ad campaign until GAO completes its investigation (Fagan, Washington Times, 2/11). At the hearing, Thompson said that the ad "tells the truth" (Rovner, CongressDaily, 2/10).
Lawmakers who support the Medicare legislation on Tuesday continued to concentrate on their efforts to educate the public about it, the Washington Times reports (Washington Times, 2/11). The House Republican Conference is launching a "media counteroffensive" in the form of public service announcements to highlight certain changes under the legislation (California Healthline, 2/10). Sen. Rick Santorum (R-Pa.) and Senate Majority Leader Bill Frist (R-Tenn.) held a press event featuring beneficiaries who expect to have copayments and premiums reduced this year as a result of the new Medicare law (Washington Times, 2/11). At the House Ways and Means Committee Hearing, Thomas said some beneficiaries already have experienced positive effects from $1.3 billion in federal subsidies to private health plans participating in Medicare. A trade group survey showed that 93% of beneficiaries will have monthly premiums reduced; more than 80% will have copays, deductibles and other out-of-pocket spending requirements fall; and more than 60% will experience enhanced coverage, CongressDaily reports (Rovner, CongressDaily, 2/10). House Republicans on Tuesday sent a letter to members of the Republican conference explaining those figures (Washington Times, 2/11). In addition, the National Republican Congressional Committee sent a memo to House members running for re-election and Republicans seeking to challenge incumbent lawmakers in the upcoming election, advising them not to "oversell the new law" in their re-election campaigns, AP/Fort Lauderdale Sun-Sentinel reports. According to the memo, lawmakers should emphasize that the new drug benefit is voluntary and stress that the legislation is "only a start toward solving a problem affecting many seniors," according to the AP/Sun-Sentinel (Sherman, AP/Fort Lauderdale Sun-Sentinel, 2/11). Republicans on Tuesday also worked to counter Democratic criticism of a provision in the law that bans the federal government from negotiating directly with pharmaceutical companies for drug discounts, CongressDaily reports. Frist said that the wording for the provision, known as "noninterference language," came from the Senate Democrats' proposed Medicare legislation. He added that as recently as January, the Senate Democratic Policy Committee Web site included a statement that "[d]iscounts should be achieved through competition, not regulation or price controls, and should mirror practices employed by private insurers in delivering prescription drugs" (Rovner, CongressDaily, 2/10).
Sen. Jeff Sessions (R-Ala.) is attempting to put language in a budget reconciliation bill that would require the Senate Finance Committee to create "statutory ways" to keep spending on the Medicare law under $400 billion over 10 years, Roll Call reports. Sessions also supports revising the Medicare law to include the $400 billion cap, according to Roll Call. "We ought to be able to create benefit programs that are not unguided missiles," Sessions said, adding, "It's time for Congress, when they get an estimate on the cost of a bill, to make sure they stick to it." Senate Budget Committee Chair Don Nickles (R-Okla.) is "seriously considering" such a measure, and committee members Sens. Wayne Allard (R-Colo.) and John Kyl (R-Ariz.) said they favored such a provision, according to Roll Call. However, Kennedy called Sessions' plan "unworkable," adding that Congress should control Medicare costs by repealing the provision prohibiting the federal government from negotiating lower drug prices with pharmaceutical companies. He added that limiting spending under the law could prevent some beneficiaries from receiving the benefits or could prompt HHS to raise premiums. Sen. Max Baucus (D-Mont.) said that Sessions' plan "doesn't address the root causes of why might Medicare and health care costs be rising" (Pierce, Roll Call, 2/11).
A provision in the Medicare law earmarking $500 million over the next 18 months for prescription drugs that Medicare does not currently cover has "trigger[ed] a squabble" among pharmaceutical companies and patient advocacy groups, the Wall Street Journal reports. The fund aims to help 50,000 beneficiaries pay for prescription drugs not administered in doctors' offices -- the only medications Medicare covered previous to the new law. Those medications will not be covered by Medicare until the prescription drug benefit begins in 2006. In writing the legislation, Congress did not specify which drugs or diseases would be eligible to use the funds, leaving that task up to CMS. Stuart Guterman, the CMS official charged with allocating the money, said, "Clearly, this is a limited benefit." In the "nonbinding but influential" conference report on the legislation, language was inserted that would earmark 40% of the funds for cancer drugs, the Journal reports. Makers of medications for arthritis and multiple sclerosis, on the other hand, have said that money "should be equally distributed to treat their patient populations," according to the Journal. Sen. Chuck Grassley (R-Iowa) has said that "lawmakers who wrote the bill intended to distribute the money equally among disease groups," the Journal reports. He added, "The report language is clearly in error and refers to an entirely different provision, not the one we negotiated" (Lueck, Wall Street Journal, 2/11).
Some health care advocates are concerned that a provision in the Medicare law that reduces reimbursement payments to pharmacies for immunosuppressant drugs will prompt them to stop stocking the medications, AP/Long Island Newsday reports. Such medications are given to people who have had an organ transplant and cost Medicare at least $10,000 annually per beneficiary. The law calls for reducing payments for the drugs by 10 percentage points, according to Dolph Chianchiano, vice president of health policy and research at the National Kidney Foundation. Chianchiano said, "We are very concerned looking forward that drug stores won't stock these drugs," adding, "We are beginning to hear patient complaints." John Rector, general counsel of the National Community Pharmacists Association, said that the reduction "could mean a store taking a $1,000 or $2,000 hit." Paul Kelly, vice president of federal legislative affairs at the National Association of Chain Drug Stores, said drug stores might continue to carry the drugs as a community service or if they can obtain a profit from selling other items. He added, however, that the rate reduction "might cause a pharmacy to say this just isn't worth it" (Agovino, AP/Long Island Newsday, 2/10).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.