Senators Outline Medicare Reform, Prescription Drug Plans

As Congress begins addressing Medicare reform and how to institute a prescription drug benefit for seniors, fissures are beginning to emerge between the House, Senate and White House regarding the best way to accomplish these goals, CongressDaily/A.M. reports (Rovner, CongressDaily/A.M., 2/15). Senate Finance Committee Chair Charles Grassley (R-Iowa) said Feb. 14 that his committee -- which has jurisdiction over Medicare -- would take an "incremental" approach to reforming the program and would attempt to add a prescription drug benefit within the existing Medicare framework. Joined by the ranking Democrat on the committee, Sen. Max Baucus (Mont.), Grassley said he hoped to get Medicare "modernization" legislation through the committee by August. Grassley and his aides outlined three basic elements to the reform envisioned by the senator: HCFA reform, which has received criticism from both the sides of the aisle for its "heavy-handed regulat[ion]," should be "revamped" or a separate agency should be created to "supervise private health plans serving Medicare beneficiaries"; Medicare+Choice improvement, the government should work with managed care organizations to encourage greater participation in the Medicare+Choice program, especially in rural areas; and Trust Fund improvement, the financial condition of Medicare should be "shore[d] up" (Pear, New York Times, 2/15).

Is the Bush Plan Dead?
The Los Angeles Times reports that Grassley's and Baucus' plan to pursue incremental Medicare reform has "deal[t] a blow to President Bush's campaign promise to make sweeping changes" to the system (Rubin, Los Angeles Times, 2/15). During the campaign, Bush backed a two-part Medicare reform plan in which states would first receive $48 billion over four years to implement a prescription drug benefit for low-income seniors, followed by a long term, $110 billion program to modernize Medicare by instituting private competition and offering drug benefits to seniors through separate health plans (Kaiser Daily Health Policy Report, 9/5/2000). Bush late last month sent the short term "Immediate Helping Hand" program to Congress, where it was met with skepticism from most members of both parties (Kaiser Daily Health Policy Report, 1/30). Yesterday, Monica Tencate, the Finance Committee's health policy director, said that the committee had no plans to take up the short term drug plan, as members believe that they can go beyond providing a benefit only to low-income seniors (John Kastellec, Kaiser Daily Health Policy Report, 2/15). Discussing yesterday's remarks by Grassley and Baucus, she added, "I don't want to prematurely say that we're significantly breaking from anything the administration is doing. But we are not starting with the administration proposal" (New York Times, 2/15). Still, White House spokesperson Scott McClellan said the president "remains encouraged" that Congress will work on a Medicare overhaul plan "sooner rather than later" (Los Angeles Times, 2/15).

Join the Armey
Adding to the growing number of voices on Medicare reform, House Majority Leader Dick Armey (R-Texas) Feb. 14 "laid out a very different vision" of a prescription drug benefit than Grassley and Baucus. Speaking at a meeting sponsored by the Texas-based Institute for Policy Innovation, Armey outlined the principles that he believes should guide any benefit: First, existing private coverage should be protected, and second, a benefit should be focused on the indigent (CongressDaily/A.M., 2/15). Third, "Even if we could afford to cover every single drug bill, we shouldn't try. Consumers who can afford to do so should pay the small routine bills," he said (McQueen, AP/San Jose Mercury News, 2/15). Finally, Armey concluded, "There must be no bureaucratic rationing or government price controls" (CongressDaily/A.M., 2/15).

The Work Continues
The Senate Budget Committee holds hearings today to examine the costs of paying for a prescription drug benefit (AP/San Jose Mercury News, 2/15). (This hearing will be Healthcast at www.kaisernetwork.org). In a speech yesterday to the AARP, Grassley, who also sits on the Budget Committee, said that the projected budget surplus "could yield as much as $400 billion to $500 billion for Medicare reform, Medicare prescription drugs and a variety of other health initiatives addressing Medicaid and the uninsured over 10 years" (Fulton/Rovner, CongressDaily, 2/14) In addition, Sens. John Breaux (D-La.) and Bill Frist (R-Tenn.) today will introduce the "Bipartisan Medicare Reform Package," which includes both their Breaux-Frist I and more incremental Breaux-Frist II plans to reform Medicare and introduce a prescription drug benefit (Breaux release, 2/14). Grassley said that the principles of "stripped-down" Breaux-Frist II are "a good starting point" for discussing Medicare reform (CongressDaily/A.M., 2/15). Baucus added that he preferred the second version because it "protects" the fee-for-service element of Medicare (Kastellec, Kaiser Daily Health Policy Report, 2/15). He also said that any reform efforts to introduce competition into the system must be approached cautiously. "It's my experience that often competition and deregulation, in theory, look good, but in practice there are a lot more problems than meet the eye. Take airline deregulation in rural areas, or the partial deregulation of power in California. Let's just be careful," he said (New York Times, 2/15).