- The Washington Times - Wednesday, July 2, 2003

The Medicare prescription drug bill President Bush hopes to sign this summer has sparked a split in his party and between the White House and its conservative think tank allies.

The House and Senate bills now headed into a congressional conference to iron out differences represent the largest expansion of the Medicare program since it was created in the 1960s. The House bill, which has more market reforms than the Senate bill, passed by a single vote — after a lot of Republican arm-twisting — as Republican lawmakers balked at its size, $400-billion price tag and substantial red tape.

The gulf between the House and Senate bills is significant and that has driven a wedge between the administration and many Republicans. A letter to Mr. Bush, signed by 27 Republican senators just before the bill passed, explained their complaints:

They want a bill that focuses prescription drug coverage “on those who need it most,” one that breaks with the “inefficient Medicare price-control structure,” and has stronger incentives to move the elderly into private, less expensive plans of their choice.

“We fear this legislation will instead do harm to Medicare” and send its costs soaring in future years, the senators said.

Opposition to the bills is even stronger outside Congress among conservative policy institutes whose members and donors represent the fastest-growing part of the GOP’s political base. “It distresses us to see people in the administration say this is a good thing. This is a pig in a poke,” Heritage Foundation President Ed Feulner told me in an interview.

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

“We can’t support this,” Mr. Feulner told Bush political adviser Karl Rove last month.

More than a dozen conservative think tanks, the source of much of the administration’s reform ideas, have told the White House the same thing. The policy rift over time may not be “permanent, but it’s serious,” Mr. Feulner told me.

Significantly, White House officials admit the competing bills do not contain all the market-based competitive reforms they had hoped to get and that the ultimate compromise — if there is one — will likely need further fixing in the years ahead.

In a background White House briefing for a small group of columnists last week, a top Bush adviser conceded that “there is still work to do. The intent is to get market-based reforms in this bill, But we know we won’t get everything. We assume we will will need to come back and change” the law.

The administration says it has no figures — beyond the dubious, 10-year, $400-billion price tag — about what this prescription drug plan will ultimately cost. There are roughly 40 million Medicare beneficiaries, but that number is expected to at least double by 2020.

Notably, 10 percent of existing Medicare beneficiaries account for 70 percent of the program’s costs, say administration officials.

Medicare’s unfunded liability now stands at $13 trillion. The pending prescription add-ons could cost another $8 trillion, Heritage officials say.

One of the best cost-constraint provisions in the House bill is a means-testing attempt to limit its subsidies to moderate and lower income people.

But Sen. Ted Kennedy, Massachusetts Democrat, who backed the Senate bill, has warned any effort to get that into the final version will be a deal breaker he would filibuster.

“Who around the administration is saying that this or that provision is a deal breaker? That’s what the White House did with the tax bill. They ought to be doing it with this one,” Mr. Feulner said. “You are going to have truck drivers paying for [Microsoft billionaire] Bill Gates’ prescription bills.”

But White House officials talk up the competitive, market provisions in the bills that will encourage retirees to buy into more efficient, lower-cost private plans and the long-term savings that will be derived from them. In an age of biotech wonder drugs that will help the elderly avoid surgeries and long-term hospital care costs, the savings will be huge, they say.

What are the political implications for President Bush in all this? The White House and its allies say it will rob Democrats of their best issue and boost the president’s support among the elderly in 2004.

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

“Besides, this will not fully kick in until 2006,” he added. “If you are going to have exploding costs, they are way down the road” — many years after George W. Bush has left the presidency and retired to his Crawford, Tex. ranch.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.

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