Senators’ Plan for Drug Benefits Gives Seniors Care Choices

All seniors would have access to equal prescription drug benefits, whether they stay in traditional Medicare or join managed-care plans, under a bipartisan agreement unveiled Thursday by key senators.

The Senate Finance Committee pact reached between its chairman, Sen. Charles E. Grassley (R-Iowa), and the ranking Democrat, Sen. Max Baucus of Montana, could be a key development in the quest to add a prescription drug benefit to Medicare.

Grassley called the compromise “truly a landmark decision for our senior citizens,” but Baucus was more reserved, describing it as “a good first step.”

Medicare covers hospital care and doctor visits for more than 40 million senior and disabled Americans at an annual cost of roughly $255 billion. But it lacks a prescription drug benefit. The government estimates that the average Medicare beneficiary uses about $2,440 a year worth of prescription medicines.

The compromise tries to bridge the differences between the White House and Democrats on the future of Medicare.

Preferred-provider organizations would get a new and extensive role in the 38-year-old Medicare program, meeting President Bush’s primary reform objective.

But the program’s current fee-for-service structure would be preserved, which is the Democrats’ bottom line.

And while the bipartisan plan offers inducements, such as preventive care, to seniors who join private health plans, it does not attempt to use different levels of prescription coverage to foster the demise of traditional Medicare.

The White House issued a statement Thursday saying that Bush was “encouraged” by the agreement and would “continue to work with Congress to pass Medicare reform this year.”

Moderate lawmakers of both parties said they decided to settle for something less than their ideal in hope of producing a bill that could move out of the Finance Committee and win Senate passage.

With the presidential campaign season getting underway, most lawmakers and seniors’ advocates believe that if Congress does not pass a Medicare prescription-drug plan before this fall, it might not get another chance until 2005.

“We can’t squander this opportunity,” Baucus said.

Democrats also are worried that failure to pass a Medicare bill could be used against them in the 2004 campaigns.

Yet criticism from members of both parties suggested that passage of the measure is far from assured.

Sen. John D. “Jay” Rockefeller IV (D-W.Va.), a member of the Finance Committee, said the proposal’s promotion of PPOs could leave many seniors in rural areas without access to care and force others to leave their longtime doctors.

He accused the Bush administration of “bribing private plans” to participate in Medicare with up to $25 billion in government subsidies, money “which could be going to prescription-drug benefits.”

To entice private health plans and drug-benefit plans to cover Medicare beneficiaries -- as a group, they are typically sicker and in need of more expensive care than other medical patients -- the government would take on some of the risk normally borne by insurance companies.

Sen. Rick Santorum (R-Pa.), also a committee member, had equally serious but very different concerns about the bipartisan agreement.

“We need to get people into PPOs and HMOs, particularly high users of the system,” he said, adding that seniors should be offered better drug benefits to encourage them to join such plans. “There does not need to be a fee-for-service benefit for people like me when we reach retirement age.”

The partisan dispute over private health plans versus traditional Medicare has lately obscured the main focus of the Medicare improvement debate: the shape and size of a new prescription-drug benefit.

Grassley and Baucus agreed to keep the package’s total cost within the 10-year, $400-billion price cap Bush requested. But the committee doesn’t yet know how much different elements of the package will cost, and until it receives cost estimates from the Congressional Budget Office, it cannot settle specific provisions and benefit levels.

Adding to the uncertainty is the difficulty of predicting how seniors will respond to the new plan -- how many will join PPOs or HMOs, and how many who stay in fee-for-service will choose Medicare drug coverage.

If approved, here’s how the proposed prescription-drug benefit would work:

* Starting next year, all seniors age 65 and older could buy a Medicare discount drug card that committee aides predicted would save them 10% to 25% on most prescription medications.

* Beginning in 2006, all seniors who join private plans would get drug coverage through their PPO or HMO, while those who stay in traditional Medicare could buy into a stand-alone drug benefit.

* The benefit package, premiums and deductibles would be the same for most seniors, but the government would heavily subsidize premiums and co-payments for low-income seniors.

* Seniors not classified as low-income would pay a monthly premium of roughly $35, as well as an annual deductible of about $275. Beyond that, each senior would be responsible for paying half of his drug costs until the total costs reached $3,450, with the managed-care plan or stand-alone drug benefit plan picking up the other half.

One of the quirks of the plan is a gap in coverage. Between the $3,450 to $5,288 level, seniors would be required to pay all drug costs.

After that, the benefit plan would pay 90% of drug costs, leaving the beneficiary responsible for the other 10%.

Republicans say that the only way to make a prescription-drug benefit affordable was to make beneficiaries bear a substantial part of the cost. Democrats said Thursday that they don’t like the coverage gap, but that it was the only way to design a plan within the $400-billion limit.