Senators Begin Crafting ‘Hybrid’ Medicare Rx Drug Proposals

Anticipating that neither of the two competing Medicare drug benefit proposals that the Senate plans to consider today will win the 60 votes needed for passage, some senators are creating "hybrid versions" of the plans, the New York Times reports (Pear, New York Times, 7/23). As it stands, most Democrats back a proposal sponsored by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.) that would establish a Medicare prescription drug benefit at an estimated cost of as much as $500 billion over eight years. Under the legislation, seniors would pay a $25 monthly premium with no deductible, a $10 copayment for generic drugs and a $40 or $60 copayment for brand-name treatments. The government would cover 100% of seniors annual out-of-pocket prescription drug costs that exceed $4,000. Low-income seniors would pay reduced premiums, and the bill would exempt Medicare beneficiaries with annual incomes less than 135% of the federal poverty level from premiums and copayments (California Healthline, 7/22).

The Graham-Miller plan is competing with a proposal from a tripartisan group, which includes Sens. Charles Grassley (R-Iowa), Olympia Snowe (R-Maine), Orrin Hatch (R-Utah), John Breaux (D-La.) and James Jeffords (I-Vt.). That group has proposed a 10-year bill under which Medicare beneficiaries would pay an estimated $24 monthly premium in the first year. After meeting a $250 annual deductible, the government would cover 50% of beneficiaries' total annual prescription drug costs up to $3,450 (or $1,850 total out-of-pocket), and then 90% of their drug costs once out-of-pocket drug spending exceeded $3,700. Beneficiaries with incomes up to 150% of poverty who meet resource requirements would receive premium and cost-sharing assistance (Jeffords release, 7/15). According to preliminary scoring by the Congressional Budget Office, the bill would cost $370 billion over 10 years (Fulton, CongressDaily/AM, 7/23).

The Times reports that Senate leaders hope the expected failure of the Graham-Miller and the tripartisan bills will "stimulate serious negotiations" to reach a compromise on a drug benefit later this week. Some senators have said that they will be able to reach agreement on the benefit's cost, but added that compromising on how to deliver the benefit and on the roles of the federal government and private insurance companies will be more difficult. One of the possibilities senators are considering is a drug benefit offered through Medicare and initially run only by the federal government, the Times reports. The government would assume all the risk of the program, which would begin in 2005, and after "several years," competing private insurers would begin to offer drug benefit plans to seniors and assume some of the program's risk (New York Times, 7/23). Breaux has asked the CBO to estimate the cost of such a plan (California Healthline, 7/22). CongressDaily/AM reports that the CBO has not been able yet to score such a measure (CongressDaily/AM, 7/23).

Senators also are considering a measure that would establish a demonstration project in several states to determine whether private insurers could manage a Medicare drug benefit, Sen. Blanche Lincoln (D-Ark.) said. She added that senators also may opt to provide medication assistance to low-income seniors who lack drug coverage, a group considered the "most immediate problem" (New York Times, 7/23).

The following summarizes recent editorials on the prescription drug debate.

• Dallas Morning News: The Democratic Medicare drug benefit proposal is "fiscally irresponsible" because it does not address "Medicare's financial woes," according to a Dallas Morning News editorial. Instead, the tripartisan plan is the "best hope" for Medicare because it would give seniors more choices, improve Medicare+Choice financing and "lay the foundation for a more secure Medicare" (Dallas Morning News, 7/23).
  
  
• Detroit Free Press: The Democratic plan to add a drug benefit to Medicare "tilt[s] in a better direction" than the House-passed plan, the Detroit Free Press writes in an editorial. Given the "pressing ... need" for a Medicare drug benefit, "it's past time for the Medicare program to be changed to address the realities of modern medicine -- and the costs," the editorial concludes (Detroit Free Press, 7/21).
  
  
• Newsday: Pharmaceutical costs would be "driven down by competition" if Congress approves the generic drug bill (S 812) sponsored by Sens. Charles Schumer (D-N.Y.) and John McCain (R-Ariz.). The Senate's Democratic leadership is using the generic bill as the vehicle for the Medicare proposals. The bill would "close loopholes" that drug companies use to extend their patents and "tip the balance in favor of consumers." Newsday concludes, "Consumers win if the bill becomes law" (Newsday, 7/22).
  
  
• New York Times: The Democratic Medicare drug plan is "the best" because it offers the "most complete coverage at the lowest cost to the beneficiaries," according to a New York Times editorial. While "bargaining on a compromise plan will intensify" if both plans fail to pass, the Times notes that voters "have a right to expect a more universal" drug benefit. The editorial concludes, "The senators who don't want to provide it will have to explain that it was impossible because they blew all the money on tax cuts for the rich" (New York Times, 7/23).
  
  
• Wall Street Journal: A Senate-passed amendment to the generics bill allowing drug reimportation from Canada "has absolutely zero chance of lowering drug prices in the United States," the Wall Street Journal writes in an editorial. Given that drug companies are "under no obligation to sell drugs to anyone," they would "simply demand Canada get serious at the bargaining table" if "a flood of cheap pills looked to threaten their core profit center in the United States." In addition, because foreign governments have negotiated discounts, American companies will only "make a return on their R&D investment" if they charge what the market will allow. "The reimportation bill would force a lot of changes, but lower drug prices in the U.S. is not one of them," the Journal concludes (Wall Street Journal, 7/23).

The following summarizes recent commentary on the prescription drug debate from columnists.

• Cynthia Tucker, Atlanta Journal-Constitution: The debate over a Medicare drug benefit will include "lots of sob stories," but the "simple truth is that the nation has done a good job of providing for its senior citizens." Children, however, have been allowed to "languish in poverty" without the health care, education or housing they need. Seniors should "worry about that" because without attention now, children will not have the skills to "shoulder the massive burden" of subsidizing the "huge baby boom cohort." The Senate's concern for seniors has "less to do with their finances and more to do with their political clout" (Tucker, Atlanta Journal-Constitution, 7/21).
  
  
• Thomas Oliphant, Boston Globe: Given the opposition from House Republicans and President Bush, Senate Democrats need to "think through their commitment to creating a long-overdue drug benefit under the umbrella of Medicare itself." At the same time, those favoring a private sector approach need to consider the Democrats' position on the scope of the new benefit as well as controlling drug costs. With "gaps" between the two sides, "there may need to be an election to change the equation," Oliphant concludes (Oliphant, Boston Globe, 7/23).
  
  
• Ronald Brownstein, Los Angeles Times: It is "probably for the best" that the Democratic drug benefit plan is unlikely to win the 60 votes needed for passage. Congress and the White House need more time to consider "whether the nation can afford such an expensive promise when the number of seniors around to collect on it will soon grow rapidly" (Brownstein, Los Angeles Times, 7/22).
  
  
• Jay Ambrose, New York Post: The Democratic Medicare drug plan would "have taxpayers, including the poorest, pay prescription drug benefits to the richest age group in America, the elderly." Medicare needs reforming, instead of a "grotesque[ly]" large expenditure that would "lead to outrageously higher taxes, a siphoning of money from other programs or a bout of deficit spending." Ambrose concludes: "The [Bush] administration has attacked the Democratic plan, and if something like it finally gets through Congress, the president ought to veto it" (Ambrose, New York Post, 7/22).
  
  
• Robert Bartley, Wall Street Journal: The "one way" to cut drug prices without harming research incentives would be to "reduce the huge cost of development" by "reigning in the FDA bureaucracy," Bartley writes. While the FDA monitors the safety of drugs, it also requires them to be proven effective, even though medical research continues once a treatment is on the market. Instead, Bartley says that it "may be reasonable" to allow some drugs on the market after stage II trials, which establish safety and "some evidence of efficacy." Examining "overregulation by the FDA," however, is the "last thing on the [Senate's] agenda," Bartley writes (Bartley, Wall Street Journal, 7/22).
  
  
• John Goodman, Wall Street Journal: Any Medicare drug benefit plan passed "at this point will mortgage the future of our children and grandchildren," Goodman, president of the National Center for Policy Analysis, writes in the Wall Street Journal. Goodman notes that if "the average Medicare expenditure were combined with the average Medigap premium and paid to a single plan," there would be enough funds to enroll seniors in health plans like other Americans have. "[W]e do not need more money to pay for prescription drug coverage in the system. We just need to spend it more wisely," Goodman concludes (Goodman, Wall Street Journal, 7/23).

C-SPAN's "Washington Journal" today includes commentary by Sens. Charles Grassley (R-Iowa) and Bob Graham (D-Fla.) on the drug benefit proposals ("Washington Journal," C-SPAN, 7/23). A video excerpt of Grassley's comments is available online in RealPlayer. A video excerpt of Graham's comments is available online in RealPlayer.