Congress Must Decipher Rival Medicare Rx Bills

By James R. Hood

WASHINGTON, June 30, 2003 -- Congress has taken the first big step towards enacting a Medicare drug benefit. Now it has to finish the job by working out major differences between the bills passed last week by the House and Senate. That may not be easy and may take a lot longer than the few weeks the Bush White House is counting on.

The Senate bill was passed with support from both parties but in the House, conservative Republicans voted grudgingly if at all. Many of them voted against the bill despite personal appeals from Bush, who has made a Medicare drug bill one of his top priorities in preparing for the 2004 elections.

The Senate and House votes broke a six-year stalemate and held out the promise of the biggest expansion of Medicare since its creation in 1963. Benefits would not be available until 2006.

Both major parties are putting their spin on the vote -- the Republicans portraying themselves as the party that finally broke the logjam, the Democrats promising they'll boost the benefits the initial $800 billion measure would provide if given a majority in the next Congress.

President Bush has said he hopes to sign a Medicare drug benefit bill in July, in time for the August Congressional recess, which begins July 25. But Congressional leaders from his own party were quick to caution against setting any deadlines. House Majority Leader Dennis Hastert (R-Ill.) said it would be "improper to hurry the process" and Senate Majority Leader Bill Frist (R-Tenn.) said he would spend "whatever time it takes."

Reactions

Reactions were mixed, with liberal and labor groups generally questioning both measures, particularly the House version.

"Older Americans have every right to be very angry with their elected officials today," said George J. Kourpias, President of the Alliance for Retired Americans, an AFL-CIO affiliate.

"They have adopted Medicare plans that will ultimately dismantle the nation's largest, most efficient, most successful health insurance system - all for purposes of political expediency."

"Medicare spending has exceeded expectations from the beginning," said Richard Jackson of the Concord Coalition, a conservative group. He said the measure will be "much more costly than current estimates."

"That is partly because many members of Congress want the program to be more expensive -- generous -- in covering seniors' drug costs. Also, the easy availability of drugs will inflate demand," Jackson said.

Differences Between the Bills

Both versions provide that beneficiaries would pay an annual deductible of about $300, then a percentage of drug costs up to a point intended to define catastrophic illness. Beyond that point, Medicare would pay all or virtually all of a beneficiary's costs. Premiums would average about $35 per month.

The House and Senate bills are similar but the House bill contains several measures that seek to encourage more private participation while limiting the growth of the Medicare bureaucracy.

Measures unique to the House bill include these provisions:

• two types of tax-free personal savings account for medical expenses;
• higher payments to health maintenance organizations and other measures intended to foster competition between private providers;
• wealthier individuals would have to pay more of their own money to qualify for some types of coverage.

The Senate, on the other hand, included several measures not found in the House bill. It:

• would require the government to provide drug benefit coverage if no private plans were operating in a given region;
• offers higher benefits to some beneficiaries based on their income;
• has no requirement that private plans be paid to provide benefits.

Trying to Please Everyone

Republicans found themselves trying to satisfy two audiences -- elderly voters who have been demanding a drug benefit program and conservatives who fear runaway costs and growing government influence over health care and the pharmaceutical industry.

Hastert, for example, said that, "People don't expect the conservative Republican Party to save Medicare and add prescription drugs but we did it." Then, in the next breath, Hastert said the $800 billion plan "is not a huge government program" and promised his right flank that he would not let Medicare "get out of hand."

Sen. Frist, the only M.D. in the Senate, has been much more positive in pushing the plan, a pattern he followed last week by promising "a new era for Medicare that offers better care for today's seniors and for those generations to come."

Lobbyist Gridlock

Left largely unspoken of were the huge pressures on Republicans from the drug companies, medical device manufacturers, health care providers and other business interests that will continue lobbying hard for their share of the largesse.

The pharmaceutical companies are fighting to keep Medicare from setting drug prices and to defend against steps that would make it easier for drugs to go generic. Hospitals, doctors and health-care agencies will be lobbying for higher payments while insurance companies will be looking for as much government support and as few regulations as they can get.

In fact the prospect of an extended reconciliation process sets the stage for special interests to "flood the zone," in the words of one health-care lobbyist, overwhelming legislators and winning so many industry concessions that benefits to seniors are watered down.

That prospect led John C. Rother, policy director of AARP, to urge quick action in the conference committee.

"The longer this legislation hangs out there, the more it becomes a target for special interest groups," Rother said.