- The Washington Times - Sunday, June 29, 2003

A deepening political split over prescription drug benefits divides the White House and conservative activists, who say the issue provoked the most serious rift of George W. Bush’s presidency.

Nearly a dozen conservative think tanks and policy groups inside and outside the Beltway have lined up against the $400 billion Medicare-reform package that Mr. Bush appears ready to sign as soon as a bill reaches his desk.

“It distresses us to see people in the administration say this is a good thing. This is a pig in a poke,” Edwin J. Feulner, president of the Heritage Foundation, said in an interview.

The Heritage Foundation, one of the Bush administration’s chief sources of reform ideas, led the attacks against the Medicare bills passed Friday by the House and Senate.

Heritage and other conservative policy groups are funded by hundreds of thousands of donors who have been among the president’s biggest supporters. But now Mr. Feulner calls the administration “naive” and warns that it is making a major policy blunder that the president will regret.

“They have this naive notion that if you go into a House-Senate conference you will get a better bill than you had going in,” Mr. Feulner said. “They should know that’s not going to happen.”

The Senate’s Medicare bill passed 76-21, while the House bill passed 216-215. Differences between the two are to be ironed out by legislators in conference.

Mr. Bush yesterday asked lawmakers to resolve their differences quickly and offer seniors prescription drug coverage for the first time in the Medicare program’s 38-year history.

“The Congress must now pass a final bill that makes the Medicare system work better for America’s seniors,” Mr. Bush said in his weekly radio address, taped before he arrived at his Texas ranch for the weekend. “This is an issue of vital importance to senior citizens all across our country. They have waited years for a modern Medicare system and they should not have to wait any longer.”

Both bills — estimated to cost about $400 billion over 10 years — would provide seniors with prescription-drug benefits, either through private drug-only plans for those who stay in traditional Medicare or through a new option that would use private health groups to deliver comprehensive health coverage.

The balking conservative groups say the plans are a fiscal “disaster” in the making that in varying degrees move away from the stronger marketplace reforms that Mr. Bush wanted and would lead to the largest expansion of government since the administration of President Lyndon B. Johnson.

Mr. Feulner said Medicare reform has driven a wedge between the White House and the many conservative think tanks fighting the leigislation as written, including the American Enterprise Institute, the Cato Institute, the Manhattan Institute, and the Dallas-based National Center for Policy Analysis.

“No, I don’t think it’s permanent, but it’s serious,” Mr. Feulner said of the policy split between Mr. Bush and his 200,000 member foundations.

Mr. Feulner declined to discuss his conversations with the White House about the issue. But another source close to the administration said that in a discussion with chief White House political adviser Karl Rove, “Feulner didn’t mince words,” flatly telling Mr. Rove: “We can’t support this.”

The prospect of a major entitlement expansion when Medicare is in financial trouble, and from a conservative administration, further angered conservative budget cutters and deficit hawks.

Prominent talk-radio hosts such as Rush Limbaugh and Sean Hannity are among those who have been most critical. And the fact that the legislation is backed by many of the Democrats’ most liberal lawmakers, including Sen. Edward M. Kennedy of Massachusetts, intensified their anger.

“Republicans are rushing through a skeleton of reform in the hope that it will work. They may believe they can make good politics out of bad policy, but in the long run it may come back to haunt them,” the Wall Street Journal editorialized last week.

But leaders of other large grass-roots groups say the intense opposition from the think tanks is not being felt that much at the Republicans’ political base.

“Are there concerns that there are large costs downstream? Sure,” said Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce. “But near term I don’t think there is a downside” for Mr. Bush.

“This will not fully kick in until 2006. If you are going to have exploding costs, they are way down the road, probably long after Mr. Bush has left the presidency,” Mr. Josten said.

Before then, Mr. Josten predicted, Congress will revisit the issue and add increased market competition to Medicare to bring costs down and achieve additional savings.

This is the strategy that the administration says it intends to pursue.

“There is still work to do. The intent is to get market-based reform in the bill, but we know we won’t get everything we want,” a Bush health care adviser said last week at a White House background briefing with reporters. “We assume we will need to come back and change [the program].”

Whatever plan Congress approves will substantially expand the costs of Medicare, which now has a $13 trillion unfunded liability, the adviser said. The American Enterprise Institute estimates the bills could raise long-term costs by another $8 trillion.

Administration officials argue that enacting a prescription drug benefit will be popular with senior citizens. The White House expects the legislation will rob Democrats of one of their biggest campaign issues next year.

“This will wipe the prescription drug issue off the radar screen,” a Republican campaign official said, on the condition of anonymity.

But a recent survey by pollster John Zogby for the Galen Institute suggests the elderly may not be as supportive of the pending reforms as the administration thinks.

Among its key findings: 74 percent said the prescription drug coverage would not be as good as the plans they have and 66 percent worried that they could lose private health care coverage. Also, 78 percent said it was very or somewhat likely that “if the government gets into the business of providing prescription drug benefits for Medicare … the government would eventually control what drugs are produced and developed.”

This article is based in part on wire service reports.

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