Senate Rejects Several Democratic Amendments to Medicare Reform Legislation

The Senate yesterday rejected several Democratic amendments to its Medicare reform bill (S 1) and reached a "tentative agreement" on how to divide an unallocated $12 billion in the 10-year, $400 billion plan, the Washington Post reports (Dewar/Eilperin, Washington Post, 6/25). The Senate bill 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, 6/24).

The Senate took the following actions yesterday:

• Senators voted 54-42 to reject a proposal by Sen. Barbara Boxer (D-Calif.) that would have eliminated the gap in drug coverage between $4,501 and $5,800 in beneficiaries' costs. Boxer called the gap a "$1,300 penalty for sickness." However, Sen. Rick Santorum (R-Pa.) said the amendment would have cost $64 billion and would have benefited only between 2% and 4% of beneficiaries (Washington Post, 6/25).
  
  
• The Senate rejected on a 52-43 vote a proposal by Sen. John Rockefeller (D-W.Va.) that would have counted employer contributions toward a retired worker's drug coverage and the retired worker's drug expenditures toward out-of-pocket costs. Democrats said the provision would encourage employers to maintain retirees' drug coverage by allowing Medicare coverage to take effect earlier. However, Republicans said the amendment would subsidize employers for coverage they are already offering (CQ Today Midday Update, 6/24). A Congressional Budget Office report found that more than one-third of employers that currently offer retiree drug benefits would drop the coverage under the current Senate proposal.
  
  
• The Senate voted 54-41 against a proposal by Sen. Frank Lautenberg (D-N.J.) that would have begun the drug benefit in 2004 instead of 2006, as the bill currently states (Washington Post, 6/25).
  
  
• The Senate approved on a 93-3 vote an amendment proposed by Sen. Mark Dayton (D-Minn.) that would decrease federal lawmakers' drug coverage to the level that Congress ultimately approves for Medicare beneficiaries. The amendment, called "Taste of Their Own Medicine," would apply to both senators and representatives. As federal employees, members of Congress now have a choice of private plan options with prescription drug coverage. The AP/Las Vegas Sun reports the amendment is unlikely to survive a conference committee during which the House and Senate Medicare reform proposals would be reconciled (AP/Las Vegas Sun, 6/24).
  

Sen. Charles Grassley (R-Iowa) yesterday said Democrats and Republicans are "making progress" on a deal to spend the remaining $12 billion in the $400 billion plan (Toner/Pear, New York Times, 6/25). The CBO 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. Over the past few days, senators have been debating how to spend the $12 billion they have not yet allocated (California Healthline, 6/24). The Wall Street Journal reports the final Senate bill will likely designate $6 billion for "experiments in private plan competition" proposed by Republicans and $6 billion for chronic disease management and other services under fee-for-service Medicare, as proposed by Democrats (Rogers, Wall Street Journal, 6/25). Yesterday, the New York Times reported that Grassley and other senators advocated spending $6 billion on a proposal that would have the HHS secretary select regions in which the government would encourage competitive bidding among private plans. Medicare payments for participating plans would be set based on bids, not on formulas set by federal law or regulations, according to the New York Times (California Healthline, 6/24). An aide to Sen. Max Baucus (D-Mont.) said some "outstanding substantive issues" remain, including whether Democrats' changes to the fee-for-service program would take place in the same regions where competitive bidding would occur among private plans (Rovner, CongressDaily/AM, 6/25).

To build support for the Medicare reform proposal, President Bush is scheduled today to meet with a group of House Republicans who have concerns about the legislation, the Los Angeles Times reports. Some Republicans, who say the House measure does not do enough to control health care costs, worry that attempts to inject more private competition into the House bill will be stripped in the anticipated House-Senate negotiations, according to the Times. House Speaker Dennis Hastert (R-Ill.) and other GOP leaders also have been meeting with hesitant House Republicans to make assurances that House-Senate negotiations would not "water down key reforms" in the House proposal, the Los Angeles Times reports (Hook, Los Angeles Times, 6/25). 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, a provision not included in the Senate bill (California Healthline, 6/24).

Rep. Mike Pence (R-Ind.) said yesterday he was told by Bush administration officials that a group of between 20 and 25 Republicans is prepared to vote against the House proposal, which is expected to reach the floor today. "I believe the conservatives in the House are the last line of defense. This is the vote. This is the last time to stop it," Pence said. Rep. Jim DeMint (R-S.C.) said, "I'm planning to vote no. I'm convinced this is a prescription for socialized medicine. ... I want to change it or stop it." Rep. Jeff Flake (R-Ariz.) said there are "enough people that are concerned [with the House proposal] to stop it." A spokesperson for House Majority Whip Roy Blunt (R-Mo.) said although House leaders are still working to obtain the votes needed for passage, they "expect to get there before the bill gets to the floor" (Fagan, Washington Times, 6/25). Meanwhile, Rep. Collin Peterson (D-Minn.) estimated that as many as 15 to 20 Democrats may support the bill because it includes an additional $12 billion in funds for rural Medicare providers. "That's what is going to bring members on," Peterson said (Wegner/Heil, CongressDaily/AM, 6/25). However, CongressDaily reports House Democratic leaders are working to dissuade Democrats who represent rural areas from voting for the House proposal (Wegner, CongressDaily, 6/24).

As House Republican leaders attempt to gather support for their bill, they are considering adding an amendment that would allow pharmacists to reimport U.S.-made medications from several nations, including Canada, where they are often cheaper. The Senate bill includes a similar provision but would only permit medicines to be reimported from Canada. The House also is considering a measure adopted by the Senate that would speed the market entry of generic drugs (Washington Post, 6/25).

USA Today features excerpts from an interview with Senate Majority Leader Bill Frist (R-Tenn.), who is helping in the Republicans' effort to add a prescription drug benefit to Medicare. Frist yesterday said he expects the Senate will pass its Medicare reform proposal this week by a "filibuster-proof" 70 votes or more, USA Today reports. However, Frist warned that Bush may have to "take the lead" in House-Senate negotiations for a final bill (Welch/Page, USA Today, 6/25). CongressDaily/AM today also profiles Frist, who it says must concern himself with as many as 27 "disgruntled" Republican senators who are "not enough to block passage" of Medicare legislation but are enough to "push for a change in leadership" if they are unhappy with the bill's final shape (Fulton, CongressDaily/AM, 6/25).

The following broadcast programs reported on the Medicare reform debate:

• CBS' "Evening News": The segment examines seniors' concerns about coverage gaps in the proposed drug benefit (Chen, "Evening News," CBS, 6/24). The full segment is available online in RealPlayer.
  
  
• CNN's "Inside Politics": The program interviews Santorum about the Senate Medicare bill (Woodruff, "Inside Politics," CNN, 6/24). The full transcript of the program is available online.
  
  
• NPR's "Morning Edition": The segment examines provisions in the House Medicare bill that aim to increase competition among private health plans, such as competitive bidding. The segment includes comments from Bush's speech at the Biotechnology Industry Organization's annual conference in Washington, D.C.; Cato Institute Health Policy Director Tom Miller; Kaiser Family Foundation Vice President; and Medicare Policy Project Director Tricia Neuman and Urban Institute President Robert Reischauer (Rovner, "Morning Edition," NPR, 6/25). The full segment is available online in RealPlayer.