2003-11-23 04:00:00 PST Washington -- A fierce political battle over the biggest expansion of Medicare since the program's creation in 1965 will move to the Senate on Monday, after House Republicans and the Bush administration early Saturday quashed a conservative rebellion to pass a $400 billion prescription drug benefit.
"In the nearly 40 years since Medicare was launched, this is the most significant opportunity for any Congress to improve health coverage for our seniors," President Bush declared in his Saturday radio address.
Democrats, including Dianne Feinstein, are expected to tip the balance, it will be the first time that the giant health care program for the elderly has offered coverage of prescription drugs, now a vital component of modern medicine.
Starting in 2006, the legislation would provide Medicare's 43 million seniors and disabled the option of purchasing a prescription drug benefit for $35 a month with a $250 deductible. They also have the option of joining a private health plan such as a preferred provider organization that would provide a drug benefit as part of broad health care coverage.
The cliffhanger vote in the House, after a three-hour roll call, capped a contentious debate and some heavy pressure from Bush, who lobbied reluctant Republicans from Air Force One on his way back from England to push the bill over the finish line.
With Bush's help, GOP leaders, offering still unknown deals to individual members, finally pressured enough lawmakers, including Democrats, to change their votes to prevail 220-215. However, the Bay Area delegation voted along party lines, with Republicans in favor and Democrats opposed.
What may be most remarkable about the battle over the proposed prescription drug benefit is the way in which both liberals and conservatives have lined up against the historic expansion of the Great Society's most popular entitlement program, which the White House views as critical to Bush's re-election campaign.
So intense is the unified liberal and conservative opposition that Republican leaders at one point actually had lost the pivotal House floor in an extraordinary battle that began Saturday morning at 3 a.m. and did not conclude until nearly three hours later.
House Minority Leader Nancy Pelosi, the San Francisco Democrat who made defeat of the Medicare bill the fight of her party, nearly managed to get enough votes to deal Bush a stunning defeat, thanks to the unlikely support of conservative Republicans.
Accusing the bill's supporters of a 40-year campaign to destroy Medicare, Pelosi called the measure "the beginning of the end of Medicare as we know it. " For their part, the conservative Republicans see the plan as an enormous expansion of a huge entitlement program that neither privatizes Medicare nor creates other substantial market reforms.Amid this pitched battle, it is hard to decipher just what the legislation would actually do.
Health and Human Services Secretary Tommy Thompson called the proposal "one of the most complex pieces of legislation that Congress will ever vote on. "
Sen. Hillary Clinton held up on the Senate floor a crazy patchwork of arrows and lines to mock the legislation as a Rube Goldberg contraption -- precisely the tactic that her own opponents used to crater her ill-fated national health care reform in 1994.
That complexity makes it all the more likely that the bill will have unforeseen consequences on how seniors receive health care.
Will insurance companies step forward to deliver the new benefit? Concern is such that the bill promises billions of dollars in subsidies to entice them to do so.
Will the new benefit encourage employers to drop health care coverage for their retirees, a trend that is already well under way? Concern is such that more billions have been added to lure them to maintain coverage.
Will seniors choose to participate in a confusing plan that pays for 75 percent of drug costs after paying a $250 deductible -- until coverage suddenly stops once those costs reach $2,250 -- but then kicks in to hold seniors harmless for all catastrophic costs once they've paid $3,600 out of pocket? Concern is such that many politicians on both sides of the aisle fear open rebellion if the bill takes effect in 2006.
Supporters argue that the measure, flawed as it may be, offers the last, best hope for Congress to address Medicare's most serious shortcoming: its lack of a prescription drug benefit that every modern health care plan offers as a matter of course.
All sides agree that it is bizarre for Medicare to pay tens of thousands of dollars to perform a heart surgery, but refuse to pay a few dollars for the screening tests and drugs that would make such surgery unnecessary.
"We are the only industrialized country in the world that does not provide prescription drugs to seniors," said Sen. Max Baucus, a Montana Democrat who helped write the bill. "Many times we have come close. Many times we have failed. We must seize this moment."
And that is why the 35 million-member AARP, until now a reliable liberal ally on health care issues, has risked its credibility and thrown its enormous political weight behind a bill that it acknowledges is in many ways deeply flawed.
Likewise, several moderate Senate Democrats are joining Baucus and John Breaux of Louisiana, who also helped write the bill, to support it when the Senate moves toward its vote planned for Monday.
Sen. Feinstein has said she is "inclined" to vote for the bill for these same reasons. Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana and Kent Conrad of North Dakota have all said they will vote yes.
One salient issue that has often been obscured in the heated debate is that the drug benefit is entirely voluntary. Seniors can remain in Medicare exactly as they are now, or they can buy the new benefit for a $35 monthly premium and a $250 deductible.
They can also join a preferred provider organization or health maintenance organization to get broader coverage that includes a drug benefit.
The more serious question, economists contend, is what effect such a huge program expansion will have on such things as drug prices and the availability of other health plans that seniors use in addition to Medicare, such as employer-paid plans for retirees.
Democrats also railed against the bill's prohibition on re-imports of cheaper drugs from Canada, where prices are controlled, and a prohibition on using the government's purchasing power to negotiate lower drug prices. Both provisions were sought by the pharmaceutical industry.
Republicans said the latter provision was necessary to prevent the government from becoming the de facto price setter in the pharmaceutical market, while Democrats blasted the provision as a blatant giveaway to the pharmaceutical industry.
Conservatives contend that reforms are so meager that the package is little more than a gigantic new spending program for the elderly that will lead to staggering costs that will reach into the trillions of dollars in liabilities for future workers, well beyond the $400 billion estimated over the next decade.
Medicare, now covering 43 million seniors, including 4 million in California, is fast headed toward insolvency when the 77 million Baby Boom generation retires -- even without a drug benefit.
But Ways and Means Committee Chairman Bill Thomas, R-Bakersfield, who was instrumental in writing the bill, asked, "If we are trying to destroy Medicare,
why is the AARP supporting this proposal? My friends, the AARP has not abandoned you. You've abandoned seniors."
At the core of the legislation's problems -- its size, its complexity, its confusion, and the heated opposition from two wildly different quarters --
that it tries to bridge an ideological divide. Conservatives seek a market-driven health care provision, while liberals seek a government- guaranteed benefit.
The result is a Medicare prescription drug bill that is a mishmash of the two, offensive to both sides. In the end, Democrats who support the package hope that the bill will be expanded by later Congresses -- as has happened many times in the past -- while Democrats who oppose it fear that it will set in motion changes that undermine Medicare's guaranteed benefit.
As Baucus put it Friday, "This is difficult. This is messy. But it's democracy. It is absolutely frustrating. But it means we are working together."
Republicans who support the package contend that this is their only chance, when they control the White House and both chambers of Congress, to pass at least minimal market reforms, during an administration that will write regulations friendly to those reforms.
For Democrats supporting the bill, the question, and answer, is precisely the same. Better a drug benefit now that can be improved later, than none at all.
And for opponents on both sides, the answer was, better nothing, than this. Overhauling Medicare
The Medicare bill -- which passed the House on Saturday, 220-215, and heads to the Senate on Monday -- would add a prescription drug benefit and overhaul the government health care program that serves 43 million older and disabled Americans. Medicare recipients currently pay no premium for hospital coverage and about $700 per year for medical coverage. Details include:.
Drug plan
Interim card: In 2004 and 2005, recipients would qualify to purchase a discount card that the Bush administration estimates would cut drug costs by 15 percent or more. Low-income seniors would get a $600 annual subsidy. .
Primary benefit: Beginning in 2006, Medicare beneficiaries could sign up for a privately administered stand-alone drug plan or a health plan that offers primary care and drug coverage. They would be charged an estimated premium of $35 per month ($420 per year). After meeting a $250 deductible, insurance would pay 75 percent of drug costs up to $2,250..
Coverage gap: No coverage between $2,250 and $5,100 of a person's total drug costs.
Catastrophic coverage: When out-of-pocket spending reaches $3,600, insurance covers 95 percent or requires a modest co-payment.
Low-income subsidies: The premium, deductible and coverage gap would be waived for people earning up to $12,123 a year. To qualify for the subsidy, seniors could have no more than $6,000 in fluid assets. The subsidies would be phased out between $12,123 and roughly $13,500 in yearly income..
Retiree coverage: Would provide tax-free subsidies, perhaps worth as much as $70 billion, to employers who maintain drug coverage for retirees once Medicare drug benefit begins in 2006. Medicare (Part B)
Changes in Part B (doctor and out-of-hospital changes) of the existing Medicare plan include: .
Premium: By law, Medicare beneficiaries pay 25 percent of the Part B premium and the government pays the rest. Individuals with incomes greater than $80,000 would pay a larger premium. The size of their premium would increase on a sliding scale, topping out at 80 percent for people with incomes over $200,000..
Deductible: Would rise from $100 to $110 in 2005 and thereafter be indexed to the growth in Part B spending..
Role of private companies: Private firms would administer the drug benefit on a regional basis. Would provide $12 billion in subsidies to private insurers that choose to offer basic health insurance. Those include preferred provider organizations (PPOs), which encourage use of certain doctors but allow patients to go elsewhere if they pay extra, and private fee-for-service plans, which allow patients to see any doctor. Beginning in 2010, traditional Medicare also would face competition from private plans in six metropolitan areas in which at least two private plans enroll at least 25 percent of Medicare beneficiaries. For those who remain in traditional Medicare, premium increases would be capped at 5 percent a year and waived for low-income seniors. The competition would last six years. The government would provide drug coverage in any region that does not have at least one stand-alone drug plan and one private health plan..
Rural health: Would spend about $25 billion to increase payments to rural hospitals and doctors. .
Generic drugs: Would speed generic drugs to the market by limiting ability of drug companies to block cheaper equivalents..
Drug importation from Canada: Would maintain the ban on importing prescription drugs. Would allow such drugs from Canada, but only if Department of Health and Human Services certifies safety, which it has declined to do. Would authorize a study of safety issues..
Hospital payments: Would allow hospitals to avoid future cuts in payments by submitting quality data to the federal agency that runs the Medicare program. At the same time, would increase payments through Medicaid to hospitals that serve a large number of disadvantaged patients. Would impose 18- month pause in development of new specialty hospitals and limit expansion of existing ones..
Physician payments: Would block planned cuts in physician payments in 2004 and 2005 and instead provide a 1.5 percent increase..
New benefits: Would cover an initial doctor's appointment for new Medicare beneficiaries and screening for diabetes and cardiovascular disease. Would provide benefits for coordinated care for people with chronic illnesses. Would increase payments for doctors administering mammograms in hope that more are given..
Health-related tax savings accounts (Health Savings Accounts): Would allow people with high-deductible health insurance policies -- at least $1, 000 a year for individuals, $2,000 for couples -- to shelter income from taxes. Individuals younger than 65, employers or family members would make pretax contributions equal to the deductible, up to a maximum of $2,600 a year for individuals and $5,150 for families. After 65 years of age, earnings and distribution also would be tax-free, provided the money is used for health expenses, including insurance premiums, prescription drugs and long-term care. Otherwise, a 10 percent penalty would apply..
Home health care: Would cut payments to home health agencies, but not require co-payments from patients. .
Cost containment: When general revenues constitute 45 percent of Medicare spending, Congress and the administration would have to review Medicare's finances.
Source: Staff of Medicare bill negotiators
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