TOPICS > Health

Medicare Rx

July 15, 2003 at 12:00 AM EDT


KWAME HOLMAN: Some of the most prominent members of Congress from both parties began work this afternoon toward compromise legislation to create a prescription drug program under Medicare.

SEN. BILL FRIST: We absolutely have to do it right. It will have an impact on 40 million seniors with individual disabilities but in truth an impact on at least every American alive today.

KWAME HOLMAN: Members of the House and Senate need to resolve differences between their respective versions of drug benefit bills approved late last month.

REP. CHARLES RANGEL: For so long we have given support for prescription drugs, benefits except rhetorically. Now we come to this historic conference with a vast difference of opinion.

KWAME HOLMAN: But there is much in the two bills that most members can support. Both bills would provide $400 billion over ten years, to fund new prescription drug coverage to 41 million retirees in the Medicare system. Seniors would pay monthly premiums of $35, and annual deductibles– $250 under the House bill, $275 in the Senate version.

The House bill covers 80 percent of annual drug costs up to $2,000. The Senate: 50 percent of the costs up to $4,500. The House bill provides no coverage for drug costs between $2,000 and $4,900. And there’s no coverage in the Senate bill for costs between $4,500 and $5,800. Many congressional Democrats say those gaps in coverage are unacceptable. But coverage would resume for so-called “catastrophic” drug costs.

The House bill would pay 100 percent of prescription drug costs above $4,900. The Senate bill would pay 90 percent of costs above $5,800. Both bills also would allow seniors to buy prescription drugs through new private insurance plans beginning in 2006. The House bill goes further, eventually allowing private health plans to compete directly with all Medicare benefits. Some Democrats claim it’s the first step toward the Republicans’ goal of destroying the Medicare program. Tennessee Congressman Lincoln Davis:

REP. LINCOLN DAVIS: Under the House-passed bill, Medicare, as we know it, will cease to exist in seven short years, in 2010. Instead of Medicare, seniors will get a voucher for their health care, and told to go shopping, and will be forced to beg insurance companies and HMO’s to offer prescription drug coverage for them– a request that many insurance companies are already on record as saying that they will not be able to fulfill. HMO’s will compete against Medicare for younger, healthier seniors, while jacking up the prices for seniors who have chronic conditions and are in need of more care.

KWAME HOLMAN: But Wisconsin Republican Paul Ryan said revamping Medicare will give seniors a choice in health coverage, and that will help control costs.

REP. PAUL RYAN: And by giving seniors more choices, that active choice drives competition, because providers, all of those providers who are regulated and overseen by Medicare, who have to give a comprehensive benefit regulated by Medicare, those providers competing against each other for seniors’ business will bring competition to the system, and competition to the system will bring down costs over the long run.

KWAME HOLMAN: House Democrats wanted their Republican colleagues to accept the Senate’s bill. It includes a fall-back provision, allowing the government to provide drugs to seniors if not enough private plans do so. New Jersey Democrat Frank Pallone:

REP. FRANK PALLONE, JR.: So when we say that we want a drug benefit and we want to make sure there is a fall-back, so if there is no HMO in the area or no two HMO’s in the area, that we guarantee that there is a drug benefit, you know, that if we do not put that in the bill, we will never get the votes in the Senate to pass the bill, and there won’t be a drug benefit.

KWAME HOLMAN: House and Senate negotiators met for only an hour today before adjourning. They will resume what are expected to be protracted negotiations next week.

GWEN IFILL: Ray Suarez takes the story from there.

RAY SUAREZ: Two views now on the political fallout so far, and the battle to come. Robert Reischauer is the former head of the Congressional Budget Office, and is now the president of the Urban Institute, a non- partisan think tank. And Robert Laszewksi is president of health policy and strategy associates, a consulting firm that works with insurers. Well, we just saw the House and Senate beginning the work of harmonizing their two versions of the bill, are they that far apart?

ROBERT LASZEWSKI: They are very far apart. Many of the things are close. The prescription drug plan that seniors would get, the stand alone plan they could purchase, they are pretty close on that. There are not any major differences in terms of what they look like. I think most seniors and most Americans think that this is about adding a prescription drug plan to Medicare and that is true. But the most controversial and perhaps the largest part of the bills is where we go with Medicare over the next ten or twenty years. Republicans, in their bill, in the House bill in 2010 would decouple the federal government’s guarantee of payments for Medicare. Today the government is guaranteed to pay for 100 percent of a seniors part a benefits and 75 percent of part b Medicare. Under the House Republican bill there would be a complex series of bids that would occur, Medicare and private plans bidding to determine what a benchmark would be. The bottom line is no longer would there be a guarantee of what the government would pay for Medicare. That drives Democrats apoplectic because they are worried. Republicans say we have to move the system to one that is more efficient where there’s competition and the private sector or we are not going to be able to afford these benefits. So there’s a fundamental difference about where we go with the Medicare program. Is it the larger Medicare single care government run system or is it one based upon competition and not guaranteeing to seniors what they’ll get.

RAY SUAREZ: What looks like it will be on the table?

ROBERT REISCHAUER: All of this will be on the table and the question is whether they get around to taking it off the table because there are really deep differences.

RAY SUAREZ: Are there aren’t enough commonalities to begin the conversion to say here is what we agree and move on?

ROBERT REISCHAUER: As Bob pointed out, there are elements such as the basic benefit which they could reach an agreement fairly rapidly but the insistence of certain house Republicans for structural reform really sticks in the craw, not just in Democrats but also Republicans in the Senate, some, who come from rural areas, who are afraid that if the traditional Medicare program has to compete in what they regard to be an unfair playing field with private plans, sicker, older, and beneficiaries in more rural areas will be concentrated in service Medicare, have to pay more than they otherwise would have paid and they’ll get a raw deal. They are not willing to go along with this. There’s more than a Republican Democrat split here. There’s a House/Senate split as well.

RAY SUAREZ: That rural coalition that’s bipartisan. If you are from a rural state you are likely to find rural friends across the aisle who are friendlier to your way of looking at this?

ROBERT LASZEWSKI: It’s bipartisan in the Senate but that’s not much the case in the House. In the Senate we have a bipartisan agreement. 40 Republicans voted it for 35 Democrats and one independent. In other words you don’t have a Democratic or Republican bill you need both Democrats and Republicans to be on the Senate bill in the long run. In the House you have a much more partisan situation. It is a Republican bill. 19 Republicans voted against it by the way. It is largely a Republican bill. What is fundamentally going on here is there are many Republicans who feel very strongly ideologically about that that you can’t add another $400 billion entitlement program to a Medicare plan, especially as the baby boomers retire. That’s just plain out of control; we’ve got to do something about that. And they believe you have to move to the private sector. Just as many Democrats, not all certainly, feel that the way this has got to be taken care of is a government plan that can contain costs. Both sides have really drawn a line in the sand here. The problem is the lines are a mile apart. It’s not like one side believes he should spend $350 billion. The other side says $450 (billion) and we split ate $400 (billion). These are deep-seated ideological differences that I don’t know how you split.

RAY SUAREZ: Bob Reischauer, after this bill passed in the House and the Senate, the president put his sizable shoulder behind it and it looked like things were steaming along. What happened between then and the day when these conferees began their work?

ROBERT REISCHAUER: Well, people looked at the detail, and the devil is always in the detail when it comes to health legislation. These are very complex bills and the ramifications of various so the of innocent look provisions are suddenly analyzed by all the interest groups and the political actors in Washington and people then begin to draw back. At that point the Democratic senators in the senate sent a letter to the president saying these are our minimum demands. No premium support. No means testing. No tax advantage savings accounts for health which the House had put into the bill and the Senate hadn’t considered at all. And then the House shot back with a letter from the Republicans from the president saying here are our lines in the sand. They were — we have to have a competitive system. Even though this precious little evidence that a competitive system is going to save money it could in theory but in practice we haven’t seen that. And we have to have the tax advantage savings accounts and so on and on. As Bob said, these are two lines miles apart right now. But you know we have months to go and we’ll probably see pictures of the conferees meeting day after day week after week.

RAY SUAREZ: Does the 2004 election cycle play into this and how so?

ROBERT LASZEWSKI: Absolutely. Both President Bush and then Vice President Gore said we needed a prescription drug plan. They went to states like Florida and said we will pass a drug plan. The president promised that seniors should have a plan. He is going to have to go back to Florida to campaign for re-election. As many as 25 percent of the voters in the next election will be seniors they want a drug plan. As seniors are beginning to look at this somewhere between 60 percent and 70 percent of all seniors have a drug plan today. And a lot of them are taking a look at the benefits being provided here and many of them have drug benefits that are better than what they would get particularly in employer provided plans. There’s a concern that if we pass a drug plan many employers could drop the plan. The CBO has estimated a third of employers would drop the drug plan if this passes. The seniors are looking at the details wondering if they are better off nor not. We’re seeing the grass root groups getting behind these House Republicans. While one would expect the Republicans would get in line behind the president and pass a plan, there’s a lot to indicate that conservative Republican grassroots groups that telling the members to hold that line.

RAY SUAREZ: Well, Rep. Jeff Lake of Arizona said we have abandoned our principles he said to his house colleagues that passed their plan by a whisker. Is he right? Are we going to see a split in the Republican Party when this thing comes to a full vote?

ROBERT REISCHAUER: I think the most likely scenario is that a compromise looking more like the Senate bill than the House bill comes out of the Conference committee that on the House floor it faces a very uncertain future. It loses Republican votes but picks up enough Democratic votes to get through. The leadership is very reluctant but the president holds a gun at their head saying that we’re way out on a limb here. We control the Congress. We got you this far, we have to produce something. And then it squeaks through the Senate as well. The other scenario is a bill much like the House bill, which goes to the Senate, can only pick up the Republican votes and maybe one or two Democratic votes and the Republicans dare the Democrats to do a filibuster and have their fingerprints on the knife and hope that when it fails they can blame the Democrats for the failure.

RAY SUAREZ: Earlier in tonight’s program we had a discussion of the announcement of this year’s deficit and a projection of next year’s deficit. Does that reality make this conversation a whole lot harder?

ROBERT LASZEWSKI: Well, it certainly solidifies a position that many of the conservative Republicans are taking that we just can’t add another entitlement without thinking this thing through. I agree with Bob, if there’s going to be a compromise it will look more like the Senate version. But I’ll tell you, in order for the Senate bipartisan version to get through somebody is going to have to cave on their ideological foundation. I think that — I don’t think it’s beyond the realm of reason that this doesn’t go to the election which may not be the worst thing in the world because again I think most Americans think this is about adding a prescription drug benefit. I think it wouldn’t be the worst thing in the world to have a debate about fundamentally where Medicare goes. Right now the Congress is 50/50 and the country has not really weighed in on where they want to go yet.

RAY SUAREZ: Let’s look at what the universe looks like after the senate bill passes. Where do private plans stand and where does the government stand where the way our senior citizens got their health care?

ROBERT LASZEWSKI: The Senate plan wouldn’t change things that much. Most people would remain in traditional fee for service Medicare and they would buy a privately provided drug benefit that was attached to traditional Medicare. Two plans would be offered at least in each region and they would have their choice. In addition there would be some new options. The most innovative one is a regional PPO, preferred provider organization, which could provide the drug benefit plus a slightly expanded package of benefits — of Medicare benefits. It would include a stop loss and a catastrophic limit on other spending and a unified deductible, so you wouldn’t have the deductible for part A and part B.

RAY SUAREZ: A stock loss that’s a point at which the government takes on your expenses.

ROBERT LASZEWSKI: Pays everything and it’s a huge need to have one in Medicare. So it would have a little better package than fee for service Medicare. Then you could also join a HMO — much as you can join one now that would be offered on a county by county basis. Most people think that the structure of Medicare would stay about the same. There would still be roughly 85 percent of the people in the system.

RAY SUAREZ: Quickly Robert Laszewski how would the House version keep more central focus on private companies?

ROBERT LASZEWSKI: The House version has more incentives for private companies to come in with Medicare HMO alternatives. The House version by 2010 puts the traditional program on an equal plain with the private companies. The traditional plan bids for people’s business like a private plan would. It is much more favorable to opening the entire environment up to competition.

RAY SUAREZ: Gentlemen, thanks a lot.