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Senate GOP looking at new Medicare drug plan with $400 annual deductible

By David Espo

Boston.com, June 3, 2003

WASHINGTON - Senate Republicans are considering a new Medicare option that would provide preventive benefits, prescription drug coverage and protection against catastrophic health care expenses.

Medicare recipients would face a $400 annual deductible and would pay another $400 each time they are hospitalized, according to material circulating in Congress.

Seniors could receive the coverage if they enroll in a Preferred Provider Organization under Medicare, a managed care approach that is at the heart of President Bush's plan to overhaul the 38-year-old government health care program for seniors.

Congressional officials described the specifics of the coverage contained in material obtained by The Associated Press as highly preliminary.

Bush and Congress hope to enact legislation this year that would give all seniors access to prescription drug coverage under Medicare for the first time. At the same time, the president is proposing creation of a new PPO option, under which beneficiaries could see any physician for their care, but would pay higher costs sometimes far higher if the doctor were outside the PPO network.

Advocates say the private insurance market makes extensive use of PPOs and millions of Americans have grown comfortable with the care they receive from them.

The material provided no details on what the monthly premium would be for seniors enrolling in a Medicare PPO. Most beneficiaries pay no monthly premiums for hospital coverage, and those who enroll in so-called Part B Medicare, which provides non-hospital coverage, the premium is $58.70 a month.

Under traditional Medicare, according to the government's official Web site, seniors pay a $100 annual deductible to cover doctor visits, and 20 percent of a government-approved amount for services after that.

In addition, there is an $840 deductible for each hospital admission, and additional daily expenses for stays lasting longer than 60 days.

The traditional Medicare does not cover preventive care. Nor does it offer prescription drug coverage or catastrophic health care protection.

No details were available about the extent of the prescription drug care coverage that would be provided in the PPOs. Beneficiaries would receive protection against annual health care costs in excess of $6,000.

The Senate Finance Committee is expected to consider Medicare legislation next week, and Majority Leader Bill Frist, R-Tenn., has set aside the second half of June for floor debate.

Frist said Monday that after years of fruitless efforts, he believed the ''legislative stars are aligned'' for a bill to pass.

Senate Democratic leader Tom Daschle of South Dakota said he, too, hoped a bill could pass, but in veiled terms he urged Frist and the Republicans not to attempt to muscle legislation through.

''I hope that indeed we can send each other the clear message that we're not looking for a 51-vote solution,'' he said. ''We're looking for a 70 or 80 or 90-vote solution. We're looking for a compromise in this legislation that brings about a broad consensus.''

Republicans hold a 51 vote majority in the Senate, to 48 Democrats and one independent.

Frist and Daschle made their comments as the Bush administration said the president's plan to offer a new managed care option would restrain government costs and provide better health care benefits for recipients.

Officials acknowledged they expected their assertion to be challenged by estimates that lawmakers will rely on in drafting Medicare prescription drug legislation over the next several weeks.

But Thomas Scully, head of Centers for Medicare and Medicaid Services, said an agency study put the savings at roughly $22 billion over a decade, and would ''drive people to better, more comprehensive plans.''

Scully did not release written cost estimates. But a study made public said, ''These savings would continue to grow over time. In addition, beneficiaries would receive better and more enhanced services including full coverage for preventive care.''

GOP aides in Congress said they expected the Congressional Budget Office to estimate that the president's new option would increase government costs. CBO itself has yet to release figures.

The administration's study was based on the results of 31 PPO Medicare demonstration projects established around the country in recent months. This data suggested that the most efficient plans have the potential to beat Medicare's costs by an average of 2.3 percent.

''Not all PPO plans in the demonstration are that efficient, however, which is why the specific design features matter greatly,'' it said.