Senate Finance Committee Approves Medicare Reform Proposal
The Senate Finance Committee yesterday voted 16-5 to approve a nearly $400 billion, 10-year Medicare reform bill (S 1), the Washington Times reports (Fagan, Washington Times, 6/13). Under the plan, all Medicare beneficiaries would have access to a drug benefit beginning in 2006, for which they would pay a $275 annual deductible and a $35 monthly premium (California Healthline, 6/12). The $35 premium is not written into the proposal, to allow private health plans to attempt to "negotiate the best possible deal," according to the bill's sponsors (Rovner, CongressDaily/AM, 6/13). 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 (Washington Times, 6/13). The original bill would have covered half of all drug costs up to $3,450, but that provision was modified after the Congressional Budget Office estimated the original proposal would cost $50 billion less than the $400 billion allotted by Congress for Medicare reform (CongressDaily/AM, 6/13). After about $5,800, beneficiaries would be required to cover 10% of drug costs, with Medicare paying the remainder. Beneficiaries choosing to remain in traditional Medicare could sign up for a stand-alone drug benefit delivered through private insurers. They also could choose to enroll in a private health plan that offers a drug benefit under a new coverage option called "Medicare Advantage." 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 in areas in which drug-only health plans decide not to participate (California Healthline, 6/12).
The Finance Committee defeated several efforts by Democrats and Republicans to make changes to the proposal. The committee did approve some changes to the original bill, including a voice vote on an amendment by Sens. Olympia Snowe (R-Maine) and Blanche Lincoln (D-Ark.) to permit the HHS Secretary to make adjustments in premiums to reflect variations in utilization across areas (Rich, CongressDaily Markup Report, 6/12). Another approved amendment would provide $3.5 billion in additional funds for states to offset Medicaid spending on prescription drugs for dually eligible beneficiaries (Rovner, CongressDaily, 6/12). The committee also voted to delay implementation of a $25 billion package of measures proposed by Finance Committee Chair Charles Grassley (R-Iowa) to eliminate Medicare reimbursement disparities between urban and rural areas. In the original proposal, the provision was set to take effect on Oct. 1, 2004, but because the funds intended for the provision were used for other measures, the committee pushed back the start date for the measure to Oct. 1, 2005 (Norman, Des Moines Register, 6/13). The CBO yesterday estimated the drug benefit portion of the bill would cost $408 billion over 10 years, but that the entire bill would cost $399.9 billion (CongressDaily, 6/12). The proposal now goes to the Senate floor, where debate will begin on Monday (Washington Times, 6/13).
Grassley yesterday said the bill would make "the biggest improvement to Medicare in the program's history." Daschle, who voted for the proposal, said, "It's a start, however shaky we may view that start to be. We've got work to make this bill better." Breaux predicted as much as 75% of the Senate would vote for the bill when it reached the floor (Wall Street Journal, 6/13). Sen. Don Nickles (R-Okla.), who joined Sens. Bob Graham (D-Fla.), John Kerry (D-Mass.), Trent Lott (R-Miss.) and Rockefeller in voting against the proposal, said "This baby's on the railroad. It's moving" (Pear/Toner, New York Times, 6/13). However, Nickles predicted the changes to the original proposal could end up costing twice the original $400 billion estimate because beneficiaries would be "tempted" to overuse prescription drugs and because Congress could expand the benefit in the future (Goldstein/Dewar, Washington Post, 6/13).
Meanwhile, House leaders yesterday formally unveiled their own Medicare reform proposal (Rogers/Lueck, Wall Street Journal, 6/13). Under the plan, which is similar to proposals approved by the House in the last two legislative sessions, beneficiaries could choose a stand-alone 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. Under a new provision not previously adopted by the House, the amount that a beneficiary would pay before qualifying for catastrophic coverage would be determined on a sliding scale based on income. Most beneficiaries would qualify for catastrophic coverage after spending $3,700 out of pocket per year, but that figure would be higher for beneficiaries with higher annual incomes (California Healthline, 6/12). According to the Wall Street Journal, the bill would set a graduated threshold for beneficiaries whose incomes are between $60,000 and $200,000 per year. For example, a beneficiary with an income of $200,000 per year would be required to spend $12,000 in a year on prescription drugs before catastrophic coverage would take effect (Wall Street Journal, 6/13). Catastrophic coverage would begin for lower-income beneficiaries at $5,100 in total drug spending (New York Times, 6/13). The plan would cover 100% of costs once a beneficiary qualified for catastrophic coverage (California Healthline, 6/12). However, House GOP leaders yesterday unveiled several new provisions in the proposal, including a "controversial" call for competitive bidding among health plans, including the traditional government-run Medicare plan, beginning in 2010 (Heil/Rovner, CongressDaily/AM, 6/13). Under the provision, beginning in 2010 plans in areas in which competition between health plans already exists would begin bidding against each other and against the Medicare fee-for-service plan to provide coverage (Rovner/Wegner, CongressDaily, 6/12). The House bill would also add new preventive care options, including a free physical for Medicare beneficiaries and additional coverage for cholesterol screenings. The bill also includes a provision that would create subsidies for employers who provide drug benefits to their retirees and new protections for local pharmacies against "potential abuses" by pharmacy benefit managers and drug firms, the Wall Street Journal reports (Wall Street Journal, 6/13).
Speaking at New Britain General Hospital in Connecticut yesterday, President Bush urged Congress to act quickly on Medicare reform, the Hartford Courant reports (Lightman/Fillo, Hartford Courant, 6/13). Bush on Wednesday addressed 1,200 physicians and seniors at a meeting of the Illinois State Medical Society in Chicago, urging Congress to pass a bill before the July 4 recess (California Healthline, 6/12). Addressing patients and staff at the hospital, Bush said, "Congress has an obligation and a responsibility to meet the needs of our seniors, and to make sure that Medicare is modern" (Bush speech text, Hartford Courant, 6/12). About 100 protesters gathered outside the hospital during Bush's speech, chanting, "Bush's plan has to go! We don't want your HMO!" (Klimkiewicz, Hartford Courant, 6/13). One hour after Bush's speech, Democratic president candidate Sen. Joe Lieberman (D-Conn.) addressed about 200 residents of Edgehill, a senior living center in Stamford, Conn., telling them that Bush's support for a Medicare reform framework that promotes participation by private plans "falls short." Lieberman also criticized the gap in drug coverage under the Senate Finance Committee plan, which he called "a start, but it's not where we need to finish. It could turn out to be bad medicine" (Lightman/Fillo, Hartford Courant, 6/13).
The following broadcast programs reported on the Medicare reform proposals:
- PBS' " News Hour with Jim Lehrer": The segment includes comments from Bush; Daschle; Grassley; Rockefeller; Patricia Neuman, director of the Kaiser Family Foundation's Medicare Policy Project; and CMS Administrator Tom Scully (Dentzer, "NewsHour with Jim Lehrer," 6/12). The full segment is available in RealPlayer audio online.
- NBC's "Nightly News": The segment includes comments from Bush and Lieberman (Brown, "Nightly News," NBC, 6/12). The full segment is available in Windows Media online.
- CBS's "Evening News": Reports on the congressional action on Medicare (Chen, Evening News, 6/12). The segment is available in Windows Media online.
- National Business Report's "Nightly Business Report": Darren Gersh reports on Bush's action on Medicare reform. The segment includes comments by Sen. Orrin Hatch (R-Utah), Capital Analysts Network President Stuart Sweet and Bush (Gersh, Nightly Business Report, 6/12). Transcripts are available online.