- The Washington Times - Tuesday, November 25, 2003

Medicare recipients will be eligible for drug-discount cards next year and will be allowed to buy into a prescription-drug program in 2006 under the Medicare overhaul that passed Congress yesterday.

“As a physician, I’ve written hundreds of prescriptions that I knew would go unfilled because patients simply would not be able to afford them,” said Senate Majority Leader Bill Frist, who is a heart surgeon. “With this bill, that will change.”

The bill also contains a broader overhaul of Medicare, including new rules guaranteeing newly enrolled beneficiaries an initial exam, a disease-management plan for those with chronic illnesses and measures aimed at containing long-term growth in costs.

But unlike some other parts of Medicare, the new benefits do not have specified funding. With the government already expected to run a deficit for the foreseeable future, the plan’s 10-year cost of $395 billion will be tacked onto the national debt.

At its root, the bill adds a prescription-drug program to Medicare. Beginning next spring and for the next two years, Medicare recipients will have a chance to buy drug-discount cards, which could help reduce the costs of some medications by 15 percent to 25 percent. Low-income seniors could get a $600 annual subsidy as well.

Then, in 2006, the full prescription-drug program kicks in.

Medicare recipients who join the program will pay monthly premiums and a $250 deductible per year for a program offered by a private insurance company in their region. If no private company offers a plan, the government will offer a fallback plan.

Recipients will pay 25 percent of drug costs up to $2,250 per year. Between $2,250 and $5,100 recipients will pay all of their costs — the so-called “doughnut hole” in the benefit. Higher than $5,100, the government will cover 95 percent of the costs. Low-income recipients would pay even less.

The bill also creates tax-free health savings accounts for qualified medical expenses.

Democrats said the various provisions of the bill will be confusing to many Medicare beneficiaries and said, in many instances, seniors will pay more under the new plan than they do now, particularly if they have Medicaid coverage, which is directed at the poor.

“Americans would gain a better drug benefit by repeal of this legislation and replacement with a single-sentence bill that says: U.S. citizens will pay for medicine the same prices as Canadians pay,” said Robert M. Haayes, president of the Medicare Rights Center.

And for some Republican opponents, the price tag is simply unacceptable.

“The costs are going to be too great,” said Sen. John Ensign, Nevada Republican, who voted against the bill. “It was estimates around $400 billion for the first 10 years. The second 10 years, I’ve heard estimates as high as $1.7 trillion. Do we really want to do that to our children and our grandchildren?”

Analysts at the Heritage Foundation have calculated that the bill will mean a 40-year-old head of household would pay more than $15,000 in extra taxes between now and his or her retirement to fund the drug benefit.

Because only part of Medicare is paid for through payroll taxes and premiums and the rest comes from general tax dollars, the system already has an unfunded liability. The prescription-drug benefit is added to that, for a total of $5 trillion in unfunded liabilities by 2030, according to Heritage. Combined, that would mean the average household would pay nearly $4,000 in taxes per year to fund Medicare.

The bill does include some cost-containment measures, including a demand for more accurate accounting from Medicare’s actuaries and higher premiums for some existing Medicare services for higher-income seniors. The bill also creates demonstration projects in six metropolitan areas in 2010 in which private plans could compete against Medicare.

Lawmakers who said the bill doesn’t go far enough in offering a benefit already are planning on legislation for next year.

All sides expect legislation to reduce the doughnut hole, and yesterday, Senate Minority Leader Tom Daschle, South Dakota Democrat, introduced the first Medicare fix. His bill would allow the government to try to negotiate lower drug prices for Medicare recipients, and it repeals the demonstration projects called for in the current bill.

As for the bill’s political impact, House Majority Leader Tom DeLay, Texas Republican, called the bill “a big political win for Republicans.”

Republican leaders said at the very least, Democrats cannot use the issue against them. Beyond that, they said they expect voters to reward them for delivering on a promise that both parties have made in recent elections and to punish Democrats who opposed the bill.

But conservatives said Republicans will suffer for having written the bill.

“I lose sleep over the idea this vote is going to cost Republicans the House and Senate. I think it has the real possibility of leading to a senior-citizen revolt,” said Stephen Moore, president of the Club for Growth, which funds conservative Republican candidates.

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