Drug Benefit Stuck in Senate

The Senate has reached a make-or-break stage in its debate on providing a prescription drug benefit under Medicare, as Democrats pushed Monday to build support for a stripped-down plan that could rescue the issue from legislative oblivion.

A compromise that would target benefits to the poor and those with high drug costs has won support from key Democratic lawmakers--including Sen. Edward M. Kennedy of Massachusetts and Senate Majority Leader Tom Daschle of South Dakota. The proposal represents a retreat from Democrats’ traditional insistence on making Medicare benefits universally available--a significant concession aimed at attracting GOP support.

The proposal is estimated to cost about $395 billion over 10 years.

But leading GOP senators immediately criticized the plan as too little coverage for too much money. And proponents of the last-ditch compromise conceded they had not yet secured enough votes to pass the measure, which may be put to the test as early as today. If it fails and no other alternative emerges in the next day or so, the Senate’s long and much-ballyhooed debate on prescription drug relief is likely to collapse with no bill enacted.

Under Senate rules, a 60-vote majority is needed to pass any prescription drug bill. Last week, a $594-billion, seven-year Democratic plan to provide benefits through Medicare garnered only 52 votes; a $370-billion, 10-year Republican plan that would provide benefits through private insurers drew only 48 votes.

In the week since those votes, lawmakers have become increasingly concerned about political fallout if they come up empty-handed on an issue that both parties have made a staple on the campaign trail for years.

Senate Democrats are especially worried about failing to deliver on one of their top priorities because the GOP-controlled House managed to pass a prescription drug bill--albeit one Democrats consider inadequate.

The House bill would provide about $310 billion for drug coverage over 10 years. The new drug benefit would be provided not through Medicare but through subsidies to private insurers that offer benefits.

Although there may be growing political will to compromise, the philosophical differences over how to deliver the benefits are hard to bridge, and potential costs are high. The search for alternatives keeps bumping up against the same obstacles: Democrats are wary of supporting any bill that scales back coverage too far or relies on private insurers; Republicans are wary of spending too much.

The issue is expected to come to a head today or Wednesday because Daschle has said he wants to finish the debate so the Senate can move onto other matters before it adjourns for its summer recess on Friday. Barring a breakthrough on some other front, Daschle is expected to push for a vote on the new compromise.

Backed by Sens. Bob Graham (D-Fla.) and Gordon Smith (R-Ore.), the plan would provide complete drug coverage only for Medicare beneficiaries with annual incomes that do not exceed 200% of the poverty line ($23,880 a year for couples).

More-affluent Medicare beneficiaries would qualify for full drug coverage only after their annual out-of-pocket drug expenses exceeded $3,300. Those who don’t fall under the low-income or “catastrophic” coverage would get relief through a discount card, which could save them 20% or more on prescription drugs.

The focus on low-income elderly is a departure for Democrats. They traditionally oppose any form of means testing in Medicare, fearing it would stigmatize the program as a form of welfare.

But last week’s debate demonstrated that Democrats could not win passage of a universal benefit under Medicare, and many have concluded that half a loaf would be better than none.

“It’s a significant down-payment which will help millions of senior citizens who need help the most, and protect all senior citizens against catastrophic drug costs,” Kennedy said.

The result is an ironic policy twist: Democrats are supporting an alternative that would provide full benefits to fewer people than the defeated Republican alternative. Proponents of the GOP plan, which would make all Medicare beneficiaries eligible for drug coverage but provide the benefits through private insurers, derided Graham’s alternative, saying it would provide inadequate coverage for more money.

Sen. Charles E. Grassley (R-Iowa) called it “a pig with lipstick.”

“It’s really a cop-out,” said Sen. Olympia J. Snowe (R-Maine). “There is no reason to abandon comprehensive coverage.”

But Democrats resist the GOP alternative’s private-sector delivery system because they fear that insurance companies will not reliably provide coverage to people in rural states and other less-profitable regions. And they fear it is the first step toward a broader GOP effort to privatize Medicare.

Proponents of the Graham-Smith alternative say they hope to draw support from some Republicans facing reelection. But it was a big blow when Snowe and other centrist Republicans came out against the bill Monday.

“It’s hard to get this if you don’t have someone like Snowe,” said a senior Democratic strategist. “The Republicans are dug in.”

According to Families USA, an organization favoring a drug benefit, the average annual cost of prescriptions for seniors more than doubled from 1992 to 2000, from $558 to $1,211.

Prescription drugs are not covered by Medicare, the federal health insurance program for senior citizens and the disabled, in part because they were not as big a part of health care in 1965 as they are now--especially in the treatment of chronic diseases.