Medicare move historic, but more to come

As Congress moves to pass a prescription-drug benefit, both parties plan to expand the program in other ways.

Complex Medicare overhaul legislation now roaring through Congress is probably only a prelude - legislation that may set parameters for years of contentious debate to come.

That's because neither Republicans nor Democrats are satisfied with the effort, historic as it may be. Even if it passes - as now seems probable - both sides are likely to try to revisit the issue as soon as politics and the legislative calendar allow.

Conservatives want to try to expand the role of private health plans in administering health benefits for the nation's seniors. They're already grumbling that President Bush settled for too little on this issue in the name of compromise.

Democrats, for their part, are sure to push for expansion of a prescription-drug benefit that many of them consider meager and confusing.

"We'll take it as it goes and try to improve it," said the minority leader, Sen. Tom Daschle (D) of South Dakota, on Wednesday.

It remains possible that the Medicare bill, whose main feature is the long-debated addition of a prescription-drug benefit to the program, won't pass Congress this year. The issue is so complicated and all sides have such entrenched positions that some sort of insurmountable political obstacle might yet arise, as it has so often in the past.

But at time of writing both the House and Senate seemed set to approve their versions of the legislation by the end of the week. Such action would set up a conference for later this summer to hammer out the chambers' differences.

Whatever the bill's final form, it is likely to represent the most sweeping overhaul ever of a program that was a key component of Lyndon Baines Johnson's Great Society.

Both House and Senate bills allot $400 billion for a prescription-drug program over 10 years, beginning in 2006. Most beneficiaries would be required to pay monthly premiums, as well as satisfy an annual deductible before subsidies could begin.

Both would also create an alternative to Medicare's traditional fee-for-service structure by attempting to encourage seniors to join preferred provider organizations, a loose form of managed care.

The House bill goes further on this key privatization issue.

The Bush administration's original position was that any prescription drug benefit should be linked with joining a private sector health plan.

Though that approach was dropped early in Congressional debate, the White House is still eager for Congress to act. President Bush himself invited a group of conservatives to the White House on Wednesday for a personal Medicare lobbying session.

Participants said that Bush reminded them he had promised a Medicare drug benefit during his campaign.

"We're here to deliver," he told GOP waverers.

Whatever the bill's final form, it is likely to be only the first word on this contentious subject.

That's been the history of big US social programs, in general. Start with whatever is possible, and then expand and change it, year by year.

In fact, that's what many conservatives are worried about. Current projected costs of the new drug benefit are a mere guess, they say. And once the benefit has been established, it is likely to be expanded, not scaled back. That means costs could skyrocket in the years ahead.

When Medicare was created in 1965, the government predicted its hospital benefit would cost $9 billion in 1990. By the time 1990 rolled around, the actual cost turned out by closer to $66 billion, unadjusted for inflation.

Medicare is already facing a "Niagara Falls of red ink" within 15 years, when members of the baby-boom generation retire in large numbers, notes a paper by health analyst Stuart Butler of the conservative Heritage Foundation.

"Adding a drug benefit without serious reforms and constraints on future spending means massive tax burdens on generations to come," concludes this analysis.

Liberals, of course, are hoping for just such an expansion of benefits. Sen. Ted Kennedy (D) of Massachusetts, for one, supports the current Senate bill as a first start which can later be modified.

Elderly beneficiaries will demand nothing less once they experience the complexities of the new program first hand, say many Democrats.

High premiums and deductibles mean those with relatively low prescription-drug costs might not benefit. And both House and Senate versions have a confusing "doughnut hole" in their benefits. For instance, the Senate plan covers half of annual drug costs up to $4,500, after deductibles. If these costs hit $5,800, "catastrophic coverage" kicks in, and subsidies resume.

But between $4,500 and $5,800 beneficiaries are on their own. They have to pay full freight.

On Wednesday Senator Daschle called this gap "the biggest flaw in the bill. We think that flaw ought to be addressed."

Republicans, for their part, are hoping to come back to Medicare at some point in the future and increase the incentives for beneficiaries to partake of managed care.

Unless private firms begin competing for Medicare business, the nation will strain mightily to pay baby boomers' benefits, conservatives have long believed.

The possibility of Medicare debates to come was foreshadowed this week when Senate staffers decided that their version of the bill had an extra $12 billion to allocate.

Both sides got pilot programs that they hope will demonstrate the feasibility and importance of their positions. Republicans got $6 billion to test encouraging private insurers to bid against each other. And Democrats got $6 billion for an experimental program in which traditional Medicare would be expanded to include disease management and other new services.

Whatever happens, both sides of the aisle agree on one thing: A Republican President and GOP-dominated Congress seem ready to change one of the most popular Great Society programs as it has never been changed before.

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