Outlook Unclear on Prescription Drug Benefit

More than two months after the Senate and House passed comprehensive but different Medicare prescription drug bills, key lawmakers and well-connected lobbyists peg the chances for a successful compromise at only 50-50.

An online futures market that solicits investments in potential legislative outcomes rates the probability at 46%. Even Sen. Gordon Smith (R-Ore.), who describes himself as a flaming optimist on making prescription drugs more affordable for seniors, said last week that he actually thinks “it’s a 60-40 chance.”

The road ahead for the House-Senate conference committee on the Medicare bill, which meets today for the first time since July, is littered with land mines.

Even the small issues have loomed large. In August, the committee’s staff stumbled over the supposedly noncontroversial issues that its chairman, Rep. Bill Thomas (R-Bakersfield), had put first on the agenda. Senate Republicans have sparred with House Republicans, and Democrats have complained about being left out of negotiations.

“It’s difficult to see how Democrats are going to vote for the bill if they haven’t had any voice in the process,” a Democratic congressional aide said Monday.

Add the pressure of the growing federal budget deficit, and the prospects for compromise look slimmer still. Both chambers designed their bills to meet a $400-billion spending target over 10 years, but that was before the deficit was pegged at $480 billion and President Bush said he would request an additional $87 billion next year alone for U.S. operations in Iraq and Afghanistan.

Those new fiscal realities mean that securing the support of conservative Republican lawmakers “obviously is going to be difficult,” a GOP congressional aide said Monday on condition of anonymity.

One of those conservatives, Rep. John T. Doolittle (R-Rocklin), said Monday his “constituents were very concerned about the cost” of a Medicare drug benefit. “I have a hunch that program may be in a little bit of trouble right now,” he said.

Yet tens of thousands of Medicare beneficiaries, consumer advocates and health-care providers continue to press for final passage, even as they call on Congress to improve elements of the legislation that they believe go too far or not far enough.

“This bill is not really a great gift,” Shane Creamer of Bluebell, Pa., said last week as he walked from a rally of several hundred AARP members to the Capitol Hill office of Sen. Arlen Specter (R-Pa.).

At the same time, Creamer said, a Medicare drug benefit is “a question of life and death.” If the high cost of medications “doesn’t kill you physically,” he said, “it kills your standard of living.”

Creamer’s comments tracked the results of a recent public opinion poll conducted by the Kaiser Family Foundation and the Harvard School of Public Health. The survey found that while a majority of seniors wanted Congress to enact Medicare prescription drug coverage, three-quarters of seniors worried that even with such a benefit they would be left responsible for paying too much of their drug expenses.

Many congressional supporters of the prescription drug benefit say they agree that it falls short of what seniors need.

“But it’s a good start,” said Smith, the Oregon senator. Over time, many in Congress would work to close the gap in drug coverage and make the benefit more generous, he said.

Before that can happen, however, the conference committee must produce a compromise bill that can garner a majority of votes in the House and the Senate.

The most contentious issue facing conferees concerns market competition. The House bill would force traditional Medicare to compete with private health plans for patients beginning in 2010. Instead of reimbursing doctors and hospitals for their fees, this plan would have the government contribute a set amount toward each beneficiary’s health coverage.

If beneficiaries chose a health plan whose premiums were lower than the government’s contribution, they could pocket the difference. But seniors who chose fee-for-service Medicare or a private plan whose premiums were higher than the government payment would have to pay the difference.

Many Republicans have said they will vote against a final bill that does not include such competition, which they say is necessary to control Medicare spending. Many Democrats, including Sen. Edward M. Kennedy (D-Mass.), have said they will vote against any bill that includes it.

Conference committee members are also trying to design a program that will attract the participation of HMOs, preferred provider organizations, pharmacy benefit managers and other private health plans.

But Medicare’s record on that score is mixed at best.

At least 40,000 Medicare beneficiaries stand to be dropped by their Medicare HMOs next year, the American Assn. of Health Plans reported Monday, and thousands more are likely to face a reduction in benefits.

Since 1999, more than 2.4 million beneficiaries have been dropped by health maintenance organizations that complained of underfunding by Medicare. The proportion of seniors covered by managed-care plans has declined from 15% to 11%.

How many private health plans are willing to participate in a reformed Medicare program will depend on how well the government pays them, said Karen Ignagni, president of the trade group.

“There’s a strong signal from plans that if Congress acts, they will be there and beneficiaries will see a strong range of choices,” she said.

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Times staff writer Janet Hook contributed to this report.