Lawmakers reach agreement on Medicare prescription drug bill

Sunday, November 16, 2003

WASHINGTON -- Republican congressional leaders said they sealed a tentative agreement Saturday on a new prescription drug benefit for the nation's seniors, which would be the largest expansion in Medicare's history.

"We have come to an agreement on principles," Senate Majority Bill Frist said.

Talks that lasted most of the day smoothed over the last remaining wrinkles in the bill, including a proposal to have traditional Medicare compete directly with new private insurance plans and a plan to encourage employers to maintain drug coverage for retirees, officials said.

Two key Democrats, Sens. Max Baucus of Montana and John Breaux of Louisiana, joined Frist, Speaker Dennis Hastert of Illinois and other top Republicans to announce the accord, which Baucus stressed would remain tentative until lawmakers had a chance to see the details of the complex legislation.

But the agreement ends months of negotiations over the drug benefit and a broad reworking of the Medicare program to give private insurers a new large role in health care for 40 million older and disabled Americans.

It must win approval of House and Senate negotiators, many of whom have been meeting for months in search of a compromise. The legislation would then go to the full House and Senate, where tough questions await from lawmakers in both parties.

Leading Senate Democrats, including Sen. Edward M. Kennedy, D-Mass., have been critical of the details of the legislation as they have emerged piecemeal from the closed-door talks. "I remain deeply troubled that this plan will undermine the reliability and affordability of Medicare for our nation's seniors," Kennedy said in a statement issued after the agreement was announced.

Bipartisan bill

"We've not seen all the details, but it sounds like a bad deal for seniors and a good deal for the big drug companies and HMOs," added Senate Minority Leader Tom Daschle, D-S.D.

The prescription drug bill has been a top domestic priority for President Bush.

"Congress has an historic opportunity to give all our seniors prescription drug coverage, health care choices and a healthier, more secure retirement," the president said Saturday in his radio address.

Frist predicted the call would be answered. "We are very optimistic we'll be able to send a bipartisan bill to the president ... in the next few days," he said.

Lawmakers think they can cut in half the number of retirees who would lose their private coverage by providing $70 billion in tax-free subsidies to their former employers, officials said.

The new proposal would, in turn, free up more money for low-income seniors who currently receive their drug coverage through Medicaid, the joint federal-state program for the poor.

The changes were devised by Republicans, then presented to the two Democratic negotiators.

The legislation would install the most far-reaching changes to the program since it was created in 1965. At its core, beginning in 2006, it would give millions of older Americans a prescription drug benefit, projected to cost $400 billion over 10 years.

The bill would provide drug discount cards for seniors in 2004 and 2005, estimated to reduce drug costs an average of 15 percent.

At the same time, private insurance companies would play a significant role in Medicare by delivering prescription drugs and offering managed-care plans or new preferred provider organizations. Those organizations encourage patients to use doctors inside a network but allow them to see other physicians for an extra charge.

The sweeping legislation also would send more money to rural doctors and hospitals.

Unrelated to Medicare, it would create a health-related tax break for individuals with high-deductible insurance policies, one of several demands made by conservatives in exchange for their support for the drug benefit.

Lawmakers also have agreed essentially to maintain a ban on importing cheaper prescription drugs from abroad, despite the growing popularity of such imports across the country and in Congress.

Direct competition between traditional Medicare and the new private plans has been the most vexing issue in the nearly five months since the House and Senate passed differing versions of the Medicare bill.

Democrats and some moderate Republicans strongly oppose the competition, saying it would drive up premiums for people who opted to stay in traditional Medicare. The government-run program allows beneficiaries to choose their doctors and hospitals.

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