Medicare drug program faces two key hurdles

As the House and Senate begin negotiations this month to create a Medicare prescription-drug benefit, two key hurdles will be how much wealthy seniors should benefit and whether the program should compete with private health care plans.

"This is going to be a very tough negotiation," said John Feehery, spokesman for House Speaker J. Dennis Hastert, Illinois Republican. "Both sides will be making decisions on what they can pass and what they can't pass."

Key to the passage is a senator who will not even be part of the official House-Senate conference -- Edward M. Kennedy, Massachusetts Democrat.

"He is a key player who is going to have to be dealt with," said a House Republican aide. "He's going to get some of what he wants."

Mr. Kennedy threatened to filibuster the Senate bill just hours before its passage, when a bipartisan group of senators tried to offer an income-related or "means-testing" provision. The provision -- favored by the majority of the Senate -- would have required wealthier seniors to pay a higher share of doctor costs. Mr. Kennedy opposed it.

"All seniors pay into it, all seniors should benefit from it," he said of Medicare. "I will continue to strongly oppose the inclusion of a means-testing provision in any Medicare prescription-drug bill."

But conservatives in both the House and Senate will push the conference to require means testing as a way of reducing government costs. They would like to target the new drug benefit only to those who need it, instead of promising a new government entitlement to all.

"Why the Senate liberals think we need to have taxpayers pay for Ross Perot's prescription drugs is beyond me," said Rep. Patrick J. Toomey, Pennsylvania Republican.

"If Senator Kennedy really wants to filibuster over entitlements for rich people, let's have that fight," said Rep. Mike Pence, Indiana Republican. "I really believe seniors are prepared to support a drug benefit for seniors who need it most."

The House bill already would require seniors who make more than $60,000 to pay part of their catastrophic drug coverage, instead of the government picking up the full tab, as it would for the rest.

Senate Majority Leader Bill Frist, Tennessee Republican, said some form of means testing likely will be in the final bill. He is expected to be on the conference committee.

Another issue is whether the House bill would require traditional Medicare to compete against private health plans starting in 2010.

Supporters say competition will force Medicare to modernize and become more cost-effective, while others say the plan is designed to move healthier, wealthier seniors into the private sector, essentially killing Medicare.

The Senate bill does not include this provision, but House Republican leaders have promised conservatives that they will fight to keep it in the final bill.

"For many of us, we're not interested in this bill if it doesn't have these reforms," said Mr. Toomey, adding that he and some Republicans would like even more Medicare reform.

An issue both parties and President Bush want to address in conference is ensuring employers don't drop retiree drug coverage once the plan is implemented.

Meanwhile, a House Democratic aide said Republicans may not need Mr. Kennedy's support to pass a final bill, but they need him politically. If he supports it, the aide said, Democrats will not be able to blame Republicans for a bad bill and use prescription drugs as an issue in the 2004 elections.

"We can't do that if Kennedy's at the bill signing," the aide said.

Mr. Kennedy's support makes conservatives bristle. "This is a bill Ted Kennedy likes and that's enough for most Americans, who know he wants socialized medicine in America," Mr. Pence said. "That alone is enough to sober up the voters."