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Medicare revamp pits Bush vs. Bush

Lawmakers hope to draft a bill Friday that adds a prescription drug benefit to Medicare. But many changes remain hotly disputed.

By SARA FRITZ, Times Staff Writer
Published October 14, 2003

Click here for a comparison of the House and Senate Medicare bills.

WASHINGTON - Congressional negotiations on a new Medicare prescription drug benefit have become so contentious in recent weeks that even President Bush and his younger brother, Jeb, find themselves on opposite sides.

The issue that divides them is this: Should Medicare, now funded exclusively by the federal government, pay for drugs for about 6-million low-income and disabled seniors who currently receive their medicines through a state-funded Medicaid program?

For his part, the president sides with the Senate in arguing that the federal government cannot afford to provide for drugs for Medicaid patients.

The governor of Florida, meanwhile, has been lobbying Congress and the administration in favor of a House-passed measure designed to help trim state expenditures by offering these people drugs under Medicare. Such a move would save Florida an estimated $913-million.

"It's a real burden for the states," Jeb Bush explained during a recent trip to Washington. "We're hoping that there is some recognition of that by the Congress."

But Medicare drug coverage for low-income seniors is just one of many unresolved issues that have stalled the drafting of a final bill by a House-Senate conference committee.

Other divisive issues: Will the Medicare program be required to compete with private health insurers? Should high-income seniors pay more for the Medicare drug benefit? Should the federal government administer the benefit in regions not served by private health insurers? Should seniors be allowed to import American-made drugs from Canada?

"The battle in Congress over Medicare reform is beginning to resemble a siege," writes Joseph Antos, health care expert at the conservative American Enterprise Institute.

In fact, there seems only one point on which everyone can agree: The final bill, scheduled to be drafted by Friday, won't satisfy anyone.

Both Republicans and Democrats fear the benefit will be less than most seniors expect. The House and Senate bills both call for a $35-a-month premium. The House would pay 80 percent of drug costs up to $2,000; the Senate would pay 50 percent of drug costs up to $4,500. But there would be no coverage beyond that until total spending reaches $4,900 under the House bill and $5,800 under the Senate version.

No matter how these differences are resolved, says Antos, it is impossible to design a simple, easily understood drug benefit without spending more than the $400-billion over 10 years that Congress has agreed upon.

"Imagine trying to explain to your mother that the prescription that cost her $20 last month, now costs $100, but might cost nothing later in the year," he said. "Or trying to explain to someone with an annual income of $15,000 that he is protected from high drug spending as long as he spends more than $3,000 from his own pocket."

Many Democrats say they are inclined to support a compromise because they believe Congress will be forced to improve the benefit in coming years. But that is exactly what conservative Republicans have vowed to prevent.

Some experts have predicted that the new government benefit will encourage private companies to drop drug coverage for about 4-million retirees, or about one-third of those who currently have it provided by their former employers.

"If you are going to have one-third losing their current benefit, this is going to be a disaster," says Robert Moffit, the Medicare expert at the conservative Heritage Foundation.

Some critics also worry about the proposed the role of pharmacy benefit managers, the companies that obtain drugs at discount from the manufacturer and supply them to the insured patient. Those concerns were heightened recently when the U.S. attorney in Philadelphia accused the nation's largest pharmacy benefit manager, Medco Health Solutions Inc., with defrauding the government and customers covered by the federal employee health insurance system.

Sen. Maria Cantwell, D-Wash., says the allegations, which also are the basis for a number of lawsuits, prove the need for her Senate-adopted amendment to provide for strict oversight of benefit managers.

"The allegations in these lawsuits are always the same," she noted, "overinflated drug prices, price collusion between PBMs and manufacturers, failure of PBMs to share discounts and rebates and switching patients to more expensive drugs without the consent of the patient or doctor."

Ideology is responsible for much of the turmoil within the 17-member conference committee. In general, Republican conservatives want to put Medicare into the hands of private companies that would compete for business, while liberal Democrats object to anything that would undermine the current government-run, fee-for-service system.

A group of 42 House Republicans promises to oppose the final bill if it does not include the House-passed provision requiring the government's Medicare program to compete with private plans by 2010. They see competition as a way to slow down the ever-increasing cost of Medicare.

But 36 Senate Democrats have pledged to oppose such a bill, particularly if it fails to provide for the government to run the program in regions without private plans. These critics predict that healthy seniors will opt for cheaper, private plans, leaving chronically sick people in the government-run Medicare program.

Members of the conference committee reached tentative agreement in recent weeks on three provisions. One would require high-income seniors to pay a higher premium; the second would allow any number of private plans to offer coverage in a single region; and the third would move Medicaid patients into the Medicare drug program. The president promptly objected to the latter two agreements, causing the conferees to reconsider.

White House spokesman Scott McClellan explained that the president wants the new drug benefit to go to seniors who now have no access to any drug benefit. That does not include those already receiving drugs through Medicaid.

"It's important that we use (federal) resources in the most effective way possible," McClellan said. "And there are many low-income seniors who have no prescription drug coverage and are forced now to choose between paying their bills or buying the medicines that they need."

In fact, Bush feels so strongly about this that he last week telephoned Senate Majority Leader Bill Frist, R-Tenn., and members of the House-Senate conference committee to explain his views. It was the first time the president had gotten involved in the nitty-gritty of the negotiations.

Gov. Bush's press secretary in Tallahassee, Alia Faraj, said she does not know whether the governor has discussed the issue of Medicaid patients with the president. She said the governor has made his arguments for putting these patients on the Medicare drug plan in briefing papers sent to the Department of Health and Human Services.

Means-testing seemed likely to be in the final bill until last Wednesday, when House Republicans failed, on a vote of 234-161, to pass a measure instructing the conferees to include means-testing. The vote was a setback for Republicans who favor means-testing.

Rep. Jeff Flake, R-Ariz., who authored the means-testing resolution, argued "there is no reason in the world why we ought to be paying the prescription drug benefits for the wealthiest in society, the Bill Gateses, the Barbra Streisands, the Ted Turners, the Warren Buffetts." Opponents said means-testing undermines the original concept of Medicare, which was to cost the same for every American over age 65.

The issue of reimporting American drugs from Canada, where they are cheaper, is another possible obstacle to agreement. The drug manufacturers oppose reimportation because it would eventually undermine the price structure in the United States. Both the House and Senate bills provide for reimportation, but they also would allow the Food and Drug Administration to nullify it, as the FDA has done under both the Bush and Clinton administrations.

One of the 17 conferees is Rep. Michael Bilirakis, R-Tarpon Springs, who sides with the drug industry against reimportation. He said the committee has not yet discussed that issue.

He said he shares the Food and Drug Administration's view that reimporting drugs could jeopardize safety.

Money, of course, is every bit as big an obstacle to compromise as ideology.

"We have $400-billion and everyone has $600-billion worth of wishes," House Ways and Means Chairman Bill Thomas, R-Calif., told reporters.

On Monday, another divisive issue emerged. House and Senate negotiators working on Medicare legislation told The New York Times that they are seriously considering imposing a co-payment on home health care, one of the few Medicare benefits for which patients do not have to pay such charges.

Most supporters of the co-payment are Republicans. But opposition comes from both parties, as well as from home care agencies and advocates for the elderly, the Times reported.

Early negotiations within the conference committee became bogged down in a personality clash between Thomas and Senate Finance Committee Chairman Charles Grassley, R-Iowa, who briefly boycotted the talks. According to AARP lobbyist John Rother, the committee has made more progress since House Speaker Dennis Hastert, R-Ill., and Frist entered the talks.

Members of both parties have criticized the president for failing to help mold a consensus. Last week, however, Bush invited committee members to the White House and later called some to explain his positions on these issues.

Although the president has said he wants the committee to design a full-blown drug benefit that could be offered to seniors by 2006, there is a chance Congress will adjourn without agreeing on legislation.


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