Senators Support, Criticize Senate Finance Committee’s Medicare Prescription Drug Benefit Proposal
During a Senate Finance Committee hearing on Friday, the committee's Medicare reform proposal encountered support and concern from lawmakers and CMS Administrator Tom Scully, the Washington Times reports (Fagan, Washington Times, 6/7). The committee's $400 billion, 10-year proposal -- developed by Finance Committee Chair Charles Grassley (R-Iowa), Sen. Max Baucus (D-Mont.), the committee's ranking Democrat, and other committee members -- calls for increased participation of private plans and an equal drug benefit for all beneficiaries. Medicare beneficiaries would pay a $275 annual 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 proposal would break the country into regions, in which beneficiaries would have access to at least two private drug plans. The government itself would provide a drug benefit through a contractor in areas in which insurance companies decide not to participate. 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 new plan would take effect in 2006. 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, 6/6).
Committee member Sen. John Breaux (D-La.) said the bill "combines the best of what the government can do with the best of what the private sector can do" (Washington Times, 6/7). Baucus said, "[T]his proposal does not force seniors ... into a private plan that they neither want or need. This is especially important to rural states like Montana, where most seniors don't have the option of moving into a private plan" (Reuters/Philadelphia Inquirer, 6/7). However, Sen. Don Nickles (R-Okla.) said that Congress should be sure the proposal would be "affordable and sustainable" in the future. Nickles added that he was concerned that the drug coverage under the proposal is "too generous" and would encourage beneficiaries to overuse drugs, the Washington Times reports. Senate Minority Leader Tom Daschle (D-S.D.) expressed concern about the proposal's gap in the drug coverage for beneficiaries' costs between $3,451 and $5,300. He added that he believes much of the proposal's funding would go toward enticing private plans to offer drug benefits instead of paying directly for beneficiaries' benefits (Washington Times, 6/7). Several Senate Democrats have said that they have been "left out of negotiations" on the proposal and are not familiar with the proposal's details, the Des Moines Register reports. Sen. Kent Conrad (D-N.D.) said he has not seen more than a two-page summary of the proposal. Baucus said more details would be added after the Finance Committee receives official cost estimates from the Congressional Budget Office (Norman, Des Moines Register, 6/9). Finance panel aides expected to receive final estimates from the CBO last night, the Wall Street Journal reports. The Journal reports that some of the panel's conservative members "hinted that they could vote for the current plan in order to move it to the Senate floor," where they would work out their concerns (Lueck, Wall Street Journal, 6/9).
Testifying before committee, Scully said the Bush administration has "significant disagreements" with the proposal, including that it would not offer beneficiaries a "strong incentive" to enroll in private health plans if they could receive a drug benefit by remaining in traditional, fee-for-service Medicare, the New York Times reports. He said, "We strongly prefer to have differential drug benefits." Scully also said he is skeptical that private health plans would want to offer the stand-alone drug coverage called for in the Finance Committee's proposal (Pear, New York Times, 6/7). The Journal reports that the administration believes that private health plans would reduce federal Medicare spending in the long run; however, the cost savings would depend upon how many beneficiaries would join the private plans. According to preliminary CBO estimates, however, increased reliance on private Medicare plans would not necessarily reduce expenses, the Journal reports (Wall Street Journal, 6/9). During the hearing, Marilyn Moon, an Urban Institute senior fellow, said that preferred provider organizations have administrative costs higher than Medicare does (Washington Times, 6/7). Still, Scully said that the administration is discussing ways to encourage beneficiaries to move into private plans, but did not elaborate, the Journal reports (Wall Street Journal, 6/9). He said, "We would like to ensure that people move into what we consider more efficient [health] plans as fast as possible." Despite the administration's concerns, Scully said, "I think the administration feels that [the Finance Committee proposal] is clearly a step in the right direction" (Reuters/Philadelphia Inquirer, 6/7). CongressDaily/AM reports that the Finance Committee is expected to mark up its proposal Thursday (Rovner/Wegner, CongressDaily/AM, 6/9). Senate Majority Leader Bill Frist (R-Tenn.) said he is "determined to push the legislation through the Senate this month," the New York Times reports (New York Times, 6/7).
During his weekly radio address on Saturday, President Bush "renewed his effort" for his own Medicare reform framework, which differs from the Senate Finance Committee proposal, the Los Angeles Times reports (Schmitt, Los Angeles Times, 6/8). Bush's framework calls for beneficiaries to receive 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, they 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 beneficiaries would get immediate access to drug discount cards and protection against high out-of-pocket costs (American Health Line, 6/6). During his address, Bush said, "In a Medicare system that reflects these principles, every senior in America would enjoy better benefits than they do today. And they would continue to benefit from the most important strength of American medicine: the ability to choose your own doctor. We want seniors and doctors -- not government bureaucrats -- to be in charge of the important health care decisions" (White House release, 6/7). Bush added, "We have a tremendous opportunity to reform Medicare and help our seniors. The time is right to make progress." Bush is scheduled to highlight his Medicare reform proposal in Chicago and New Britain, Conn., this week to help "quicken congressional action," the Los Angeles Times reports (Los Angeles Times, 6/8).
The following broadcast programs reported on the Medicare reform debate:
- C-SPAN's "Washington Journal": Guests on the program include Joseph Antos, health policy director at the American Enterprise Institute; Judy Feder, dean of public policy studies at Georgetown University; Linda Fishman, Senate Finance Committee Republican health policy director; and Elizabeth Fowler, Democratic chief health counsel for the Senate Finance Committee ("Washington Journal," C-SPAN). The full program will be available in RealPlayer online after the broadcast.
- NPR's "Weekend Edition Saturday": The segment includes comments from Scully and Sens. Baucus, Jeff Bingaman (D-N.M.), Jim Bunning (R-Ky.), Conrad, Frist, Blanche Lincoln (D-Ark.) and Nickles (Rovner, "Weekend Edition Saturday," NPR, 6/7). The full segment is available in RealPlayer online.
- PBS' "Nightly Business Report": The segment includes comments from Scully, Baucus, Nickles and Sen. Jay Rockefeller (D-W.Va.) (Gersh, "Nightly Business Report," PBS, 6/6). The full transcript of the segment is available online.