Medicare Drug Benefit to Cost $720 Billion in First 10 Years
His comments came on the same day new administration estimates projected the Medicare prescription drug benefit would cost taxpayers $724 billion over its first full 10 years, far higher than earlier estimates, reported the Associated Press.
The new estimates went from 2006 to 2015, when prescription coverage will be in effect the entire period, as opposed to earlier calculations, which ran from 2004 to 2013 and included start-up years 2004 and 2005.
“There’s no question that there is an unfunded liability inherent in Medicare that Congress and the administration is going to have to deal with over time,” President Bush said. “Obviously, I’ve chosen to deal with Social Security first and once we accomplish — once we modernize and save Social Security for a young generation of Americans, then it’ll be time to deal with the unfunded liabilities of Medicare.”
The new numbers prompted outcries from Democrats, saying the White House low-balled the estimates to get the Medicare drug program approved.
“An ethical cloud has hung over the Republican Medicare law since it was passed in the dark of night more than a year ago,” said House Minority Leader Nancy Pelosi, D-Calif.
Some members of Congress urged support for changing the Medicare law to grant the government power to negotiate drug prices directly with pharmaceutical companies, according to Reuters.
Other lawmakers called for a new law allowing Americans to import less expensive drugs from Canada. Sens. Byron Dorgan, D-N.D., and Olympia Snowe, R-Maine, introduced a revised version of their legislation allowing drug importation.
“We now have the worst of all worlds — skyrocketing costs and not a good benefit,” said Sen. Debbie Stabenow, D-Mich.
When Congress approved the Medicare overhaul bill in 2003, the administration told wavering lawmakers the program would cost $400 billion, including expected savings. The White House later revised the estimate to $534 billion, after the law was enacted.
White House Office of Management and Budget Director Joshua Bolten told the Senate Budget Committee that the new price tag reflects $134 billion in savings the government expects over the period because states are paying some drug costs; $145 billion more from beneficiaries’ premiums; and $200 billion in savings the program will create for Medicaid, reported the AP.
He said other than the different decade being measured, the White House’s cost estimates are “completely consistent with the numbers the administration has produced before.”
Under the drug program, participants will pay monthly premiums that are expected to average $35 in 2006 and the first $250 in drug costs. Medicare will pick up 75 percent of the next $2,000 in prescription expenses.
After that, a gap is built into coverage during which participants are responsible for the entire drug bills until costs top $5,100, after which the government pays 95 percent, the AP reported.