|MEDICARE PRESCRIPTION DRUG BILL PASSES SENATE|
November 25, 2003
An Online NewsHour Report
The bill is headed for the president's desk after also clearing the House in a pre-dawn, 220-215 vote Saturday.
President Bush, who had pushed lawmakers to pass the bill, said, "Today we had a major victory to improve the health care system in America," during a Tuesday visit to a Las Vegas hospital. "I [will be] honored to put my signature on this historic piece of legislation," he said, assuring that the bill will become law.
There was opposition to the bill from elements in both parties. Many Democrats feared the increased roll for private companies that the bill would create could lead to the eventual demise of government-run Medicare.
Sen. Edward Kennedy, D-Mass., a leading opponent of the bill, told ABC on Sunday that "what is now coming before the Senate is basically hijacking the Medicare program. [T]hey want to undermine it, and they want to privatize it."
Some conservative Republicans warned that the changes to the program would not go far enough to rein in Medicare spending and nine crossed party lines and voted against the bill.
"It looks to me like we are building a brand new deck on a house with a very unstable foundation. I think we are expanding this program like it is on a solid foundation, and it is not. We are not paying for these new benefits. We are saddling our future generations with enormous liability," Sen. Don Nickles, R-Okla., said during Senate debate on the bill before he eventually voted against it.
The bill's momentum increased as it gained support from Democrats who had misgivings about provisions within the legislation but argued that on balance the bill would help seniors.
In her speech on the Senate floor, Sen. Dianne Feinstein, D-Calif., catalogued a series of provisions in the bill that would help seniors in her home state and said: "I intend to support this bill, and not because it is perfect, but because I believe it brings substantial help to people who need that help in my state of California."
Others senators hailed the vote, emphasizing that seniors had been clamoring for a Medicare drug benefit for years.
"This has been promised for a long period of time, and I'm glad
that we were able to deliver on that promise, because we're going to
have 40 million seniors and disabled people that shouldn't have to wait
any longer for prescriptions as part of their Medicare coverage,"
Sen. Charles Grassley, R-Iowa, told reporters after the vote.
Help paying for prescription drugs: Medicare beneficiaries would be offered a chance to purchase the drug coverage primarily from regional private companies at a monthly premium of $35. After a $250 annual deductible, insurance would pay 75 percent of drug costs up to $2,250, but then provide no coverage until out-of-pocket spending reaches $3,600. Insurance would pick up 95 percent of the cost of drugs after beneficiaries had spent $3,600 in one year. Some low-income seniors would qualify for additional help under the bill. Those seniors who had been getting help from Medicaid to pay for drugs would now be covered under Medicare.
To provide some relief to seniors before the full prescription drug benefit starts in 2006, the bill would create drug cards that older Americans could purchase in 2004 and 2005. The Bush administration estimates these cards would yield savings of 10 to 25 percent or more off retail price of most drugs. Low-income seniors would get an annual subsidy of $600 to further defray their costs.
Expanded role for private firms: Along with having private firms primarily administer the drug benefit, the bill also would allocate $12 billion to subsidize private insurers who choose to offer Medicare beneficiaries basic health insurance. Preferred provider organizations, which encourage use of certain doctors but allow patients to go elsewhere if they pay extra, could participate in this program.
Along with those subsides to private insurers, the bill also includes a six-year experiment in head-to-head competition between traditional Medicare and private plans in six metropolitan areas. Residents of those areas who choose to remain in traditional Medicare would have their premium increases capped at 5 percent a year and waived for low-income seniors.
Limiting the share of Medicare paid for with general funds: The bill would require that Congress and the White House review Medicare's finances if general revenues reach 45 percent of total Medicare spending. Medicare's funding comes from a combination of general revenues, Medicare payroll taxes, premium payments and other sources.
Protecting benefits provided by former employers: In response to concerns from seniors who want to keep drug coverage currently provided by their former employers, the bill would give up to $70 billion in tax-free subsidies to employers who maintain drug coverage for retirees once the Medicare drug benefit begins.
Increased costs for higher-income seniors: In a departure from the current system that has all beneficiaries paying the same amount for coverage, under the new plan individuals with incomes greater than $80,000 would pay a larger premium for Medicare Part B, which covers doctor visits.
Changes in reimbursement rates: The bill would spend about $25 billion to help even out disparities in the amount rural areas are reimbursed for treating Medicare patients.
The bill would also reverse a 4.5 pay cut to Medicare doctors that was scheduled for 2004 and instead give a 1.5 percent increase in 2004 and 2005. Hospitals would not get any fee cuts in fiscal 2004 and would be protected from cuts in the next three years if they submit quality data to Medicare.
Congress also used the bill as an opportunity to change the way that Medicare reimburses oncologists. Currently, these doctors are reimbursed for injected treatments such as chemotherapy that are given in their offices. Congressional investigators have reported that Medicare was overpaying for the drugs. Oncologists countered that they were under-reimbursed for other costs they incurred, such as nurses and general office visits. The bill's reimbursement system would reduce government payments for cancer medicines but would increase payments for practice expenses to oncologists and other providers.
Changes that could affect drug prices: Measures in the bill are aimed at getting generic drugs to consumers more quickly by limiting pharmaceutical companies' ability to block the cheaper versions of their band-name medicines. The bill does not, however, clear the way for legal access to lower-cost prescription drugs from Canada. It also contains a provision that prohibits the government from directly negotiating with drug companies for lower prices for medicine purchased for Medicare beneficiaries.
New tax-free health savings accounts: An over $6 billion provision in the bill would allow individuals with health insurance deductibles of over $1,000, or $2,000 for couples, to put away the amount of their annual deductible -- up to $2,600 a year for individuals and $5,150 a year for families. People age 55 to 65 could make additional contributions to build a medical nest egg.
Money deposited in the accounts could be invested and then withdrawn free of taxes for insurance premiums and other health costs. The account would stay with a person for a lifetime and upon death the assets could be transferred tax-free to a spouse.
-- Karyn Schwartz, Online NewsHour