Compromise Calls for U.S. to Guarantee Medicare Drug Benefit

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Compromise Calls for U.S. to Guarantee Medicare Drug Benefit

By Robert Pear, the New York Times
October 21, 2003

WASHINGTON , Oct. 20 — House and Senate negotiators said on Monday that they had reached a tentative agreement on one of the most important issues in the Medicare bill. Under the agreement, the government would guarantee the availability of prescription drug benefits in any market where private insurers failed to do so.

Medicare would offer drug benefits through a federal backup plan if fewer than two private insurers offered free-standing policies to cover drugs for the elderly and the disabled, the negotiators said.

Republicans have generally insisted that drug benefits be provided, whenever possible, by private insurers, with a minimum of government control. But Democrats, some Republicans and many health policy experts say they doubt insurers would sell "drug-only" coverage.

After more than two hours of discussion on Monday by negotiators trying to resolve differences between House and Senate versions of the bill, Senator Charles E. Grassley, Republican of Iowa, said, "We have a fair consensus on what we ought to do."

The government, Mr. Grassley said, would assume the financial risk of providing drug benefits in any market with fewer than two prescription drug plans. A market is likely to be defined as at least a state.

The compromise sounds similar to a provision of the Medicare bill passed by the Senate in June. But it differs in some ways, lawmakers said, without giving details.

Mr. Grassley and moderate Republicans like Senator Olympia J. Snowe of Maine had insisted on a government backup plan. "There is no way to guarantee that private companies will deliver services in every region of the country, especially in rural areas like Maine ," Ms. Snowe said.

Senate Democrats shared that concern. In a letter to the White House in July, they said, "There must be a backup Medicare plan in areas of the country in which private prescription drug plans are unwilling or unable to provide the drug benefit."

The tentative agreement should allay that concern, said Mr. Grassley, the leader of the Senate negotiating team.

"Here's something that's very important, particularly to Democrats," Mr. Grassley said. "It is important to me and the Senate. The House did not have anything like it. The administration really doesn't like it. But it's something that we are going to have to have for the Senate, and it seems to me that the House is willing to buy into it."

House negotiators confirmed that account. Tommy G. Thompson, the secretary of health and human services, attended the meeting of the conference committee on Monday.

The administration had expressed concern that if the government directly provided drug benefits to the elderly, it would discourage private insurers from entering the market.

The White House had denounced the guarantees in the Senate bill, saying they authorized "a government-run delivery system for prescription drugs, which could lead to government pricing of individual drugs."

House and Senate negotiators said they had also discussed a provision of the House bill that calls for direct competition between private health plans and the traditional Medicare program, starting in 2010. The Senate bill has no comparable provision.

Under the House bill, if traditional Medicare had higher costs than the private plans, its beneficiaries would have to pay higher premiums.

House Republicans say such competition would help slow the growth of Medicare spending in the long run. But Democrats say they fear that low-income people might be forced into private plans, because they could not afford premiums for the original fee-for-service Medicare program.

Congressional negotiators said they had discussed proposals that would introduce price competition gradually, in selected markets, with a limit on the amount by which premiums could increase in any year.

Members of the conference committee have agreed to allow an unlimited number of competing private plans in each region of the country. President Bush had wanted to allow no more than three in each region.