Medicare Bills’ Costs Exceed Bush Limit

With the Medicare conference committee still basically inactive 25 days after the House and Senate passed competing reform bills, cost estimates released Tuesday show that both measures exceed President Bush’s 10-year, $400-billion spending limit.

The side-by-side comparison of the bills prepared by the nonpartisan Congressional Budget Office offered a little something for everyone -- except, perhaps, Medicare beneficiaries hoping for a more generous prescription-drug benefit.

The conference committee chairman, Rep. Bill Thomas (R-Bakersfield), said last week -- at the panel’s first and only meeting so far -- that he was waiting for the CBO numbers before beginning serious negotiations.

Although the budget office on Tuesday projected that the House bill, for example, would cost taxpayers $571 billion over 10 years, Thomas and Rep. W.J. “Billy” Tauzin (R-La.) said in a joint statement that the CBO had pegged the bill’s cost at $408 billion.

The CBO said that the $408-billion figure (later revised downward to $405 billion) represented only the bill’s direct spending for a prescription-drug benefit and other Medicare reforms.

After congressional budgeteers factored in administrative costs, revenue savings and $174 billion in tax revenues lost to a new health savings account, the cost estimate ballooned to $571 billion.

Yet the Thomas-Tauzin statement included a “pledge” to keep the cost of a compromise bill “under the $400-billion figure.”

Budget officials and congressional aides said that only two scenarios would make that possible:

The first, considered highly unlikely, would have House Republicans surrendering the health-savings account in conference. More likely, however, House Republicans will consider the cost of the health-savings accounts to be separate from the budget allocation for Medicare reform, even though they are included in the bill.

The math for the Senate bill was only slightly less complicated.

The CBO estimated that the Senate bill’s core Medicare reform and prescription-drug provisions would cost $421 billion over 10 years.

Add to that $4 billion in other costs, subtract $25 billion in revenue savings -- and the total cost figure is exactly $400 billion.

Of course, it’s not quite that simple.

Budget analysts reached the $400-billion figure only by excluding, at the request of Senate Majority Leader Bill Frist (R-Tenn.), an amendment sponsored by Sen. Maria Cantwell (D-Wash.) that would require pharmacy-benefit managers to publicly disclose the results of their discount negotiations with drug companies.

If Cantwell’s amendment is included in the estimate, the cost of the Senate bill jumps to $440 billion.

Congressional aides said Tuesday that it was unclear how, or if, the new cost estimates would affect the committee’s attempts to produce a compromise Medicare bill.

In the meantime, the committee’s vice chairman, Sen. Charles E. Grassley (R-Iowa), has been meeting with Republican and Democratic senators on the committee, and Bush has extended an invitation to all members of the panel to meet with him at the White House today.

With the House wrapping up its summer schedule Friday and the Senate scheduled to begin its August recess at the end of next week, the committee’s slow start ensures that Medicare negotiations will continue into the fall.