House Budget Committee Approves GOP Budget Blueprint, Including $350B for Medicare Reform, Drug Benefit

The House Budget Committee on March 13 approved a $2.1 trillion budget proposal for fiscal year 2003 calling for $350 billion over 10 years to reform Medicare and create a prescription drug benefit -- $160 billion more than proposed by President Bush, the Los Angeles Times reports (Hook, Los Angeles Times, 3/14). The $350 billion, which would also increase Medicare+Choice payments and physician reimbursements, is $50 billion more than what Congress set aside last year for Medicare reform. The figure is also $50 billion more than the original amount House Speaker Dennis Hastert (R-Ill.) said the Republican-controlled House would propose earlier this year. The boost came in response to "widespread speculation" that the Democratic-controlled Senate will ask for at least $400 billion for Medicare reform (Cusack, InsideHealthPolicy.com, 3/12). The committee budget proposal also calls for a 45% increase in HHS bioterrorism preparedness funding, to $4.3 billion, and meets President Bush's request for $27.2 billion for NIH, up $3.9 billion from this year (House Budget Committee release, 3/13). The budget does not include the Bush administration's request that some veterans be charged a $1,500 deductible for health care (Dinan, Washington Times, 3/14).

Back to Deficits
Congress' budget resolution is a nonbinding tool used to guide spending priorities when lawmakers pass appropriations bills later in the year. The Republican-controlled committee passed the budget proposal -- which the full House will vote on next week -- on a party-line vote of 23 to 18 (Los Angeles Times, 3/14). This year's process stands in sharp contrast to last year's, as the nation's budget surplus has disappeared following President Bush's tax cut, the war on terrorism and the recession (Kessler/Eilperin, Washington Post, 3/14). The committee's budget proposal, which calls for a 1.3% increase in spending on non-defense programs to $4.6 billion, would create a projected deficit of $45.6 billion, after a projected deficit of $65.7 billion in FY 2002 and four years of surpluses before that (Stevenson, New York Times, 3/14). And unlike last year, the budget plan does not reserve surplus Medicare funds solely for deficit reduction or reform of the program, meaning that Congress may dip into the reserves to help balance the budget. While the Republican Medicare reform proposal comes closer to the funding amount that Democrats are seeking, Democrats nevertheless "sharply attacked" the GOP plan, "noting that the budget provided only $5 billion a year for the next two years" (Washington Post, 3/14).

An Impossible Task?
To pass a Medicare drug benefit this year, "legislators will have to behave less like statesmen and more like Houdini," CongressDaily/AM's Julie Rovner writes in her "Health Matters" column. The cost of a benefit, even a somewhat modest one, is likely to exceed what is currently affordable. The Congressional Budget Office projected recently that Medicare beneficiaries will use $1.8 trillion worth of prescription drugs over the next decade. Thus, a benefit that covered only 50% of Medicare drug costs would cost $900 billion -- three times more than Congress allocated last year in the FY 2002 budget resolution before the proposal "foundered in the aftermath of Sept. 11," Rovner states. Last week, former Sen. Bob Kerrey (D-Neb.), a member of the 1999 Medicare reform commission, suggested to his former colleagues on the Senate Finance Committee that Congress should not even attempt to create a benefit given the current fiscal situation. Kerrey said, "With budget caps gone, income taxes already cut and bipartisan enthusiasm to spend considerably more on defense, it is safe to say that the era of surpluses was like passing through a village in Nebraska: We passed through it before we realized we were there" (Rovner, CongressDaily, 3/14).