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Senate Panel Approves Medicare Plan With Prescription Coverage
House Version Offers Similar Benefits
By Amy Goldstein and Helen Dewar
Washington Post Staff Writers
Friday, June 13, 2003; Page A04


The Senate Finance Committee, after splintering over Medicare's future for years, approved legislation last night that would help all older Americans pay for prescription drugs while also expanding the role of private health plans in treating the nation's seniors.

Starting in three years, the measure would offer subsidies to help Medicare's 40 million recipients buy insurance for medicine or to obtain the same drug coverage through private health plans, such as preferred-provider networks. The private plans would include other coverage more generous than Medicare traditionally has provided, including extra preventive care and new limits on out-of-pocket expenditures for patients with especially big medical bills.

The 16 to 5 vote on the $400 billion measure, which the full Senate plans to take up Monday, was hailed by several Republicans and Democrats as a milestone in Congress's drive to help older Americans afford their medicine. "Today, we are here to deliver," said Senate Finance Committee Chairman Charles E. Grassley (R-Iowa). Before the bipartisan vote to approve the measure, the committee defeated several amendments from senators who criticized it from liberal and conservative viewpoints. The panel's endorsement is significant because, for years, the Senate has not been able to agree on how to redesign the vast insurance program.

Committee members have worked on Medicare proposals every year since 1999, but never before sent a bill to the Senate floor. Last night, only two Republicans and three Democrats voted nay.

"What a difference a year makes," said Sen. Orrin G. Hatch (R-Utah). In contrast, the House, which has a larger GOP majority, has adopted legislation in each of the past two years. Yesterday, House Republican leaders announced a new version, which overlaps in some ways with the Senate's approach.

The House plan would cost the same, but would design drug benefits differently. For one thing, higher-income Medicare recipients would pay more for medicine. The House plan also would set up greater price competition between the traditional fee-for-service Medicare program and private health plans, and it would create economic incentives not found in the Senate bill for patients to join private plans.

Despite such differences, Senate Majority Leader Bill Frist (R-Tenn.) predicted yesterday that the Senate and House will resolve their differences and send legislation to President Bush for his signature before Congress's August break.

Yesterday evening, Senate Minority Leader Thomas A. Daschle (D-S.D.) called the measure "a start, however shaky we may view that start to be." He supported it, saying he hopes Democrats could make changes on the Senate floor.

During the Finance Committee's day-long debate, a few Republicans said the Senate bill would not do enough to tip the Medicare system toward the private market. Sen. Don Nickles (R-Okla.) predicted the changes could end up costing twice the $400 billion price tag, because the subsidies would be so generous that older Americans would be tempted to overuse medicine and because Congress may expand benefits in the future.

The Senate bill would let legal immigrants qualify for Medicaid and a children's health insurance program. The Finance Committee voted 13 to 8 to reject a Nickles amendment to block that provision.

Some Democrats opposed extending drug benefits through private insurers, predicting the arrangement will confuse older patients about which companies sell the coverage and how much they would have to pay. "I hope that seniors won't have to hire accountants and attorneys to tell them what their options are," said Sen. Jeff Bingaman (D-N.M).

The committee rejected, 14 to 7, a Daschle amendment that would have limited disparities in the price of drug coverage nationwide so it could not vary by more than 5 percent of the national average in a given year.

The Senate bill's drug benefit would require Medicare patients to pay a $35 monthly premium and a $275 yearly deductible before the government subsidy begins. The government then would cover half the cost of their medicine, to a maximum of $4,500 a year. That limit, originally $3,450, was increased this week after congressional budget analysts concluded that the plan could grow and still meet the $400 billion 10-year total spending limit Congress has set.

Once a patient's prescription costs reach $4,500, the coverage would stop, unless the total exceeds $5,800 a year. At that point, the patient would have paid $3,700. The government then would begin "catastrophic" coverage, paying 90 percent of additional costs.

Seniors with low incomes would be given additional help in paying for drugs.

Budget analysts, Bush administration officials and congressional aides told senators yesterday that about 4.7 million Medicare recipients -- or 12 percent -- have prescription drug costs greater than $4,500 a year, the point at which the initial coverage would end. Of those 4.7 million, 2.9 million have expenses large enough to qualify for the catastrophic coverage.

Overall, budget officials said, Medicare patients would have to pay about $1,200 in premiums, deductibles and other charges before their government subsidy exceeds what they spend themselves. About 35 percent would spend more than they receive.

The House version would also offer drug benefits through separate insurance policies or private health plans. But they differ from the Senate proposals in specifics, essentially covering a higher proportion of drug costs -- but to a lower limit.

The House version would not define the monthly premium in law, but predicts it would begin at about the same level as the Senate's: $35 a month. The House plan would include a $250 yearly deductible, then cover 80 percent of drug costs up to $2,000.

Beyond that amount, the plan -- like the Senate version -- would have a gap in coverage. The gap would be larger, with coverage resuming after a patient has spent a total of $5,100 on medicine, or $3,700 out of pocket. Beyond that, the House's catastrophic coverage would pay for all remaining costs, while the Senate's would cover 90 percent.

In one of the most significant differences, the House plan would require people with incomes above $60,000 -- or couples making more than $120,000 -- to pay more before they could start receiving catastrophic coverage. "People who make $120,000 a couple in retirement should at least be expected to pay a couple more dollars out of their own pocket . . . so the programs can work well for all," said House Ways and Means Committee Chairman Bill Thomas (R-Calif.). His committee and the House Energy and Commerce Committee intend to consider the plan next week.

c 2003 The Washington Post Company



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