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Medicare Drug Bills Pass in House and Senate

Both bills spend $400 billion over 10 years to add a drug benefit to Medicare, but differ significantly in both philosophy and detail.

The Senate bill passed with a 76-21 vote. Many conservatives who supported it said they hoped it would shift towards the House bill in the upcoming negotiations. Many liberals backed it but vowed to revisit and improve the legislation in years to come.

“I look at all those things that I wish were better,” said Senate Democratic leader Tom Daschle before he voted for the bill. “It may take months if not years but we are going to work to continue to make this a better bill, a better program.”

The House bill passed with a one-vote margin, 216-215, mostly along partisan lines. Some conservatives warned they might oppose a final version if it becomes too much like the Senate bill.

To gain support for the proposal in the House, GOP leaders attached a measure expanding medical savings accounts that offer tax breaks to encourage people to save for health costs. If enacted, the proposal would cost $174 billion over 10 years, nearly half of the entire Medicare bill.

Republicans garnered other votes by including additional funds for rural areas and payments for suburban health maintenance organizations.

Throughout the debate, House Republicans said their bill modernizes and prepares Medicare for the looming retirement of baby boomers. Democrats decried it as a sham and donned black armbands as if mourning the program’s demise.

“It destroys Medicare as we know it,” said Rep. John Dingell (D-Mich.)

But supporters such as Rep. Bill Thomas (R-Calif.), argued that “old-fashioned Medicare is not very good” as it currently exists.

The upcoming conference committee must reconcile the House and Senate bills, and members expect the work to be difficult.

“We’re going to be threading a needle in the House and Senate conference,” Sen. Olympia Snowe (R-Maine) said Friday.

Prescription drugs were a much smaller part of medical costs when Medicare was created in 1965 and drugs taken outside the hospital were not covered in the health insurance program for the elderly.

Both proposals would take effect in 2006 and would give seniors more choices among private health plans than they have now. Options would include both health maintenance organizations, or HMOs, and more flexible networks known as preferred provider organizations, or PPOs.

Each bill would require participants to pay a monthly premium and then an annual deductible before the government would begin sharing the cost of medicines. The House and Senate differ as to what portion of the drug tab seniors would have to pick up and how the benefits would be structured. Both bills include a gap in coverage and then resume help again for those with particularly high costs.

Both also provide extra help for low-income seniors, and both require more from the wealthiest. In the House, the bill requires wealthy seniors to spend more of their own money before the government helps with very high drug costs. In the Senate, lawmakers agreed late Thursday to charge the wealthy more for premiums in Medicare Part B, which covers doctor visits.

More than in the Senate bill, the House bill creates economic incentives for seniors to leave traditional Medicare and enter a private managed-care plan. After 2010, it also changes the way Medicare sets its prices, giving a far greater role to private sector competition. Democrats say the movement will lead to the privatization of Medicare.

Despite the differences, Republican leaders in both chambers said they would work for an eventual agreement on a $400 billion 10-year drug benefit.

“We are going to spend whatever time it takes to marry those two policies in a way that really will, really will, give health care security to seniors in a sustainable way long term,” Senate Republican Leader Bill Frist, of Tennessee, said Friday.

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