GOP Writes Medicare Prescription Plan

With a Medicare drug benefit becoming one of the hottest election year issues, House Republicans Tuesday offered their version of a prescription plan for older Americans--and President Clinton abruptly denounced it as a “fraud.”

But the Republican plan and President Clinton’s own proposal share a vital element: Both would create a new entitlement, a financial guarantee under Medicare that prescription drugs would be covered for the whole Medicare population: those 65 and older and the disabled of all ages.

The partisan rhetoric is intense, but strong voter interest in the issue increases chances that a deal might be struck before members of Congress go home in the fall to run for reelection.

“I think it’s going to happen--this is the kind of thing that ultimately has to happen,” said Rep. William M. Thomas (R-Bakersfield), key author of the GOP plan.

The House Ways and Means Committee will vote on the Republican plan early next week and send it to the House floor before June 23.

Republicans hope that they can use the legislative action to political advantage by declaring themselves the champions of older consumers faced with rapidly rising prices of prescription drugs. Vice President Al Gore has been pushing the defense of Medicare as a key theme in his presidential campaign.

The GOP plan, whose details have yet to be worked out, would make drug coverage available through private policies for a premium ranging from $35 to $40 a month, according to Thomas. There would be a $250 annual deductible and the beneficiary would pay 50% of the cost of each prescription, with maximum coverage up to $2,200 a year.

There would be a “catastrophic” limit of $5,000 or $6,000 a year. After the individual paid that much from his own pocket, the policy would pay 100% of any additional drug costs.

The GOP plan would work this way for an individual with medications costing $700 a month, or $8,400 a year: The beneficiary would pay the $250 deductible, then 50% of the next $2,200, or $1,100, for a total of $1,350. He would then pay the next $4,650, reaching the out-of-pocket limit of $6,000 for the year. The policy would pay the remaining $2,400.

“The people who most need the assistance are low-income people and those who are at risk of paying high dollar amounts for prescriptions,” Thomas said in an interview.

The main argument between Democrats and Republicans is how the plans would be administered. Republicans want to use insurance companies, firms that manage pharmacy benefits and other private companies to provide the coverage. Only if there is no private vendor available would Medicare handle the new coverage.

Democrats want the new benefit as an optional addition to the current Medicare program.

President Clinton’s plan calls for the government to pay for about 50% of the cost of the coverage. Beneficiaries would pay $26 a month to Medicare to cover the rest of the premium expenses. There would be no deductible. The co-payment would be 50%, up to a maximum of $2,000 a year. There would be no formal limit on annual out-of-pocket spending, but a reserve would be set aside to help those with unusually high drug bills. As in the Republican plan, the government would pay the full premium for poor people.

Democrats insisted that any new prescription drug program cannot be managed by the private sector.

“We don’t want a bill that is just helping pharmaceutical companies [and] HMOs,” Rep. Charles B. Rangel (D-N.Y.), the ranking Democrat on the Ways and Means Committee, said at a contentious hearing Tuesday devoted to the prescription drug issue.

At the White House, Clinton said Republicans are making a “bad mistake” by designing their drug benefit program to work through “some private insurance market that is already a proven failure.”

The president noted that the insurance industry is skeptical of the GOP plan, fearing that only sick people with big bills would buy policies covering pharmaceuticals.

“There’s no point in telling the American people we’re doing something that turns out to be a fraud,” Clinton said at a White House event featuring the problems of older residents in rural areas who find it hard to get drug coverage.

“And there’s no point in pretending that only poor seniors need this help--that is not true,” Clinton said.

The political cross fire will continue today, when the president stages another prescription drug event to promote his plan and attack the GOP proposal.