Rx DRUG BENEFIT I: House Committee Backs GOP Proposal

      In a party-line 23-14 vote, the House Ways and Means Committee last night approved a Republican plan to offer a prescription drug benefit to Medicare beneficiaries. GOP leaders hope to hold a floor vote before the congressional recess on July 4, the Washington Post reports. Under the proposal, the government would pay subsidies to private insurance companies that offer drug benefit policies to Medicare patients (Vita, 6/22). "Now is the time to add prescription drug coverage to Medicare," committee Chair Bill Archer (R-Texas) said, adding, "[R]ight from the start, our bill will give 5.5 million low-income seniors a prescription drug plan at minimal cost."

Critics Balk
      Rep. Pete Stark (D-Calif.) called the bill "a hoax [and] a prescription for failure," noting that under the plan the government does not directly provide drug coverage, purchase drugs or regulate drug prices. Earlier that night, the committee rejected a proposal by Rep. Benjamin Cardin (D-Md.) that would have established a standard benefit for all Medicare patients. "The Republicans say [their plan] would be an entitlement program, but there is no specific benefit that seniors are entitled to," Cardin said (Pear, New York Times, 6/22). The GOP approach has also received criticism from insurance companies concerned that the "drug-only" policies would prove financially unfeasible due to the rising cost of medications (Washington Post, 6/22). In a letter to Congress, however, Merck-Medco Chair Per G.H. Lofberg said the company would "work to develop a prescription drug-only plan" in an anticipated "highly competitive market."

White House Counteroffensive?
      The Clinton administration argued that the Republican plan "relies on a flawed, trickle-down theory that would end up subsidizing insurers, not seniors." A critique prepared by the administration stated: "Insurers are unlikely to participate unless bribed. The new Medicare bureaucracy could increase payments to insurers to bribe them to participate. This will make insurers hold out to get higher payments" (New York Times, 6/22). The Washington Times cites unnamed congressional sources claiming that White House officials had contacted drug providers and urged them not to back the GOP prescription drug plan, reportedly promising additional payments under Medicare later in the year (AP/Washington Times, 6/22).

Tortoise and Hare
      House Republicans, hoping to maintain their razor-thin majority, have focused efforts on passing a drug benefit, but GOP Senate leaders "have not shown any sense of urgency," fearing the cost of drug benefits "could explode." The Congressional Budget Office estimates that the House bill would cost $39.7 billion over the next five years (New York Times, 6/22).