Senate Finance Committee Leaders Reach Agreement on Medicare Reform Legislation
Senate Finance Committee Chair Charles Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.), the committee's ranking Democrat, yesterday reached an agreement on a $400 billion, 10-year Medicare reform proposal that would increase use of private health plans and would give an equal drug benefit to all beneficiaries, regardless of whether they join a private plan, the Washington Times reports (Fagan, Washington Times, 6/6). The agreement "clears the way" for the Finance Committee and the full Senate to vote on the proposal in the next three weeks, the New York Times reports (Pear, New York Times, 6/6). The Finance Committee is expected to hold a hearing today to examine the agreement (Washington Times, 6/6). Under the proposal, Medicare beneficiaries would pay a $275 deductible and a $35 monthly premium for the drug benefit. Participating health plans could set premiums higher or lower than $35 per month as long as the drug coverage they offer has the same overall value called for under the proposal. Beneficiaries would be required to pay half of annual drug costs from $276 to $3,450 and all drug costs between $3,451 and $5,300. After $5,300, beneficiaries would be required to cover 10% of drug costs, with Medicare paying the remainder. The Wall Street Journal reported yesterday that to entice private plans to offer drug coverage, committee members considered regulations that would split the risk between the health plans and the federal government. The committee's plan also calls for a new type of coverage, called "Medicare Advantage." Private plans would offer coverage for catastrophic health expenses and preventive care services, giving beneficiaries an incentive to move out of traditional Medicare and into a private plan. Further, beneficiaries opting for private coverage would pay a $400 deductible for hospital and doctor visits, compared with $840 for hospital stays and $100 for doctor visits for beneficiaries remaining in traditional Medicare.
The proposal would break the country into at least 10 regions, in which beneficiaries would have access to at least two private plans (California Healthline, 6/5). The government itself would provide a drug benefit through a contractor in areas in which insurance companies decide not to participate (New York Times, 6/6). The new plan would take effect in 2006, the Washington Post reports (Goldstein, Washington Post, 6/6). In the meantime, the federal government would authorize the use of drug discount cards in 2004 to help beneficiaries save money, and low-income beneficiaries would be eligible for a $600-a-year drug benefit in 2004 and 2005 (California Healthline, 6/5).
Grassley said the Finance Committee's proposal also will include a provision that would boost Medicare reimbursements to doctors and hospitals in rural areas, the Des Moines Register reports. In May, Grassley attempted to insert a provision that would have granted $25 billion to states with low Medicare reimbursement rates into tax cut legislation, but the language was not included in the final legislation signed by President Bush. Grassley aides said that many of the provisions in the senator's original provision will be included in the Finance Committee's Medicare reform proposal, adding that they are still considering how to fund the measure (Norman, Des Moines Register, 6/6).
Although President Bush and some other Republicans prefer a reform proposal that would include a "more robust" drug benefit in the private plan option to encourage seniors to join such plans, an administration official yesterday said the Finance Committee plan represents "real progress" and has "a good shot" of attracting bipartisan support in the Senate, the Washington Times reports (Washington Times, 6/6). The Post reports that the administration "did not endorse the plan outright" and that administration aides will continue to lobby Congress to create "stronger incentives" for Medicare beneficiaries to join private plans. An administration official said, "We are still committed to [Bush's] framework, but we also are committed to getting something done" (Washington Post, 6/6). The Bush administration's reform framework would give beneficiaries a choice of three coverage options beginning in 2006. First, beneficiaries could remain in traditional fee-for-service Medicare, with access to prescription drug discount cards and catastrophic protection. Second, beneficiaries could enroll in "Enhanced Medicare," which would offer a choice of private plans that include prescription drug coverage. The third option, "Medicare Advantage," would be similar to the current Medicare+Choice program, which offers a selection of private health plans with and without prescription drug coverage. Low-income beneficiaries would receive additional premium and cost-sharing assistance. In the interim, all seniors would get immediate access to drug discount cards and protection against high out-of-pocket costs (California Healthline, 6/5). Baucus said, "Unlike the president's proposal we're not using carrots to entice or coerce seniors into plans that might not work for them" (AP/USA Today, 6/6).
Senate Minority Leader Tom Daschle (D-S.D.) said the Finance Committee's plan "falls significantly short" of Democrats' goals for Medicare reform (Washington Times, 6/6). Daschle said Democrats do not favor a plan that has a gap in drug coverage, allows insurance companies to set prices or does not guarantee equal access for beneficiaries in rural areas (Fulton/Heil, CongressDaily/AM, 6/6). Daschle said Democrats will attempt to amend the Finance Committee proposal when it comes to the Senate floor. Finance Committee member Sen. John Rockefeller (D-W.Va.) said he will likely "put a hold on" the committee's proposal and prevent it from reaching the floor (Washington Times, 6/6). Some Democrats said the Finance Committee proposal does not include enough details for them to offer their support, CongressDaily/AM reports. "It's appalling -- this would be one of the most important bills we could vote on and [the Finance Committee is] playing hide-the-ball," Sen. Kent Conrad (D-N.D.) said (CongressDaily/AM, 6/6). But Sen. Edward Kennedy (D-Mass.) said the proposal "assures every elderly American that they will have reliable coverage for the exorbitant cost of their prescription drugs, without being forced to give up the Medicare they love" (Washington Times, 6/6). Sen. John Breaux (D-La.) called the committee's proposal a "reasonable compromise" because it "combines the best of what the government can do with the best of what the private sector can do" (Washington Post, 6/6). Gail Shearer, director of health policy analysis for Consumers Union, said, "This could really come back to haunt (lawmakers) because if you look at what beneficiaries are looking for, this isn't it. There are huge holes." She added that one-third of Medicare beneficiaries spend less than $500 per year on prescription drugs, and depending on the amount of the monthly premium, many beneficiaries might not sign up for the benefit (Lueck/Rogers, Wall Street Journal, 6/6). AARP Executive Director and CEO William Novelli yesterday told reporters his organization plans to launch a "major advertising campaign" on radio, television and in print this weekend that urges lawmakers to provide a "universal, affordable and continuous" drug benefit (Rovner, CongressDaily, 6/5).
- CNN's "Inside Politics" yesterday reported on the announcement of Grassley and Baucus' agreement (Karl, "Inside Politics," CNN, 6/5). The full transcript of the program is available online.
- In addition, MPR's "Marketplace" yesterday reported on the compromise. The segment includes comments from Grassley; Theodore Marmor, author of The Politics of Medicare; and Novelli (Palmer, "Marketplace," MPR, 6/5). The full segment is available in RealPlayer online.