Adding Confidence, Along With Drug Benefits, to Medicare

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Adding Confidence, Along With Drug Benefits,

to Medicare

By ROBERT PEAR
New York Times, June 11, 2003

WASHINGTON - Architects of a Senate bill adding drug benefits to Medicare set forth details of their proposal yesterday, with a growing sense of confidence that some such plan would become law this year.

Under the bill, outpatient drug benefits would become available in 2006. The principal authors of the bipartisan bill, Senators Charles E. Grassley, Republican of Iowa, and Max Baucus, Democrat of Montana, said they were making the drug benefits slightly more generous than they had originally planned because the cost of their initial proposal was less than the $400 billion allotted for the new program over the next 10 years.

At the same time, the Senate bill would increase the deductible for doctors' services for the first time in more than a decade. It is now $100 a year. It would be increased to $125 in 2006, then adjusted annually to keep pace with consumer prices.
Millions of Medicare beneficiaries in the fee-for-service program would have to pay more for laboratory tests performed in doctors' offices and hospital clinics. Medicare would cut payments to these labs by 20 percent. The labs could make up most of the difference by charging co-payments to beneficiaries.

John C. Rother, policy director of AARP, the lobbying group for older Americans, said his group believed that the drug benefits being offered had to be more generous. "Without further improvements in the bill, we are concerned that only a small proportion of seniors would sign up for the new drug benefits," he said.

Mr. Grassley is chairman of the Senate Finance Committee, which plans to vote on the bill this week. Mr. Baucus is the senior Democrat on the panel.

The Senate bill does more than create a Medicare drug benefit. It also creates alternatives to the traditional Medicare program, allowing people to join private health plans.

House Republicans have drafted a similar bill. They say that the House, like the Senate, will pass Medicare drug legislation this month. The House bill, like the Senate measure, includes equal drug benefits for people in traditional Medicare and for those who join private health plans.

House Republicans are also seriously considering treating elderly people with high incomes differently from other Medicare beneficiaries.
Representative Jim McCrery, Republican of Louisiana, said the most affluent beneficiaries might be required to pay higher premiums or there might be a higher limit on the drug costs for which they were personally responsible.

The White House said President Bush would push hard for agreement between the Senate and the House so he can sign a bill this year.

Senator Bill Frist, Republican of Tennessee, the majority leader, said: "Now is the time to act. We will act before the July 4 recess of the Senate. It will be done in a bipartisan way."

The House bill was drafted almost exclusively by Republicans. In the Senate, by contrast, Republicans worked closely with a few Democrats. Representative Charles B. Rangel of New York, the senior Democrat on the Ways and Means Committee, said he had an open mind on the Senate bill.

In an interview Mr. Rangel said that Democrats could complain "that there's not enough money or that the benefits are inadequate."

"But if a bill is moving this year — and there's a very good chance that we could pass a bill — I would not want to be standing in the way," he added. "We could use it as a foundation to build on in future years."

Mr. Rangel said he did not know all the details of the Senate and House bills. But his comments were significant because he has strenuously opposed many other Republican initiatives, and he seemed to be hinting today that he would like to work with Republicans on a Medicare bill like the Senate proposal.

One flash point in negotiations could be the idea of linking Medicare drug benefits to income.

Mr. McCrery offered two justifications for this approach. "High-income seniors can afford to take care of themselves," he said. "And it saves money for the taxpayer."
Over all, the House bill, like the Senate bill, would cost $400 billion over 10 years. That represents 22 percent of the total amount likely to be spent on prescription drugs for Medicare beneficiaries in the coming decade.

Some conservative Republicans are displeased with the bill moving through the Senate. Senator Trent Lott, Republican of Mississippi, said he had "fundamental problems" with the bill because it did not do enough to change the structure of Medicare or to encourage people to join private health plans.

The Senate bill, as described today by the authors, also includes these provisions: The government would invite private insurers to provide drug benefits to Medicare patients in the traditional fee-for-service program. Medicare would sign contracts with at least two drug plans in each region of the country. If fewer than two were available in any region, the government would step in to provide drug benefits, through a contractor.

Insurers offering drug coverage to Medicare beneficiaries could try to control costs by establishing lists of preferred drugs, by charging higher co-payments for drugs not on the list and by encouraging the use of generic drugs and mail-order pharmacies.

Medicare beneficiaries could enroll in preferred provider organizations offering extra benefits like coordination of care for chronic illnesses. The government would sign contracts with the "three lowest-cost credible plans" in each region.

Medicare would increase payments to rural hospitals and other rural providers. To help offset the costs, Medicare would freeze payments for home medical equipment, like wheelchairs and oxygen, for seven years.
In addition, under the Senate bill, Medicare would cut payments for certain cancer drugs and other medicines covered under existing law.