House Republicans Prepare to Offer Medicare Drug Benefit Plan That Would Rely on Private Insurance Companies

House Speaker Dennis Hastert (R-Ill.) is expected on May 1 to announce the details of GOP-backed Medicare prescription drug legislation that would use private companies to provide coverage and would include President Bush's proposal for government-issued prescription drug discount cards, the AP/Boston Globe reports. The 10-year, $350 billion proposal, which is "more robust" than the $160 billion benefit Republicans backed in 2000 and greater than the $190 billion benefit President Bush has proposed, would fully subsidize costs for low-income seniors and protect against catastrophic costs for all seniors. Under the proposed benefit plan, which was discussed on April 30 by House Republicans during a private meeting, seniors with incomes up to 135% of the federal poverty level, or almost $12,000 for an individual, would have all their drug costs paid, while seniors with incomes between 135% and 150% of poverty would receive "partial subsidies." All other seniors would pay a monthly premium of about $37 and an annual deductible of $250. After that, the government would pay for 75% to 80% of annual drug costs up to $1,000, 50% of costs between $1,000 and $2,000 and none of the costs between $2,000 and $5,000. Catastrophic insurance coverage would cover all annual drug costs greater than $5,000 (AP/Boston Globe, 5/1).

The Senate Plan
Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.) on May 1 are expected to counter the Republican proposal by announcing an eight-year, $425 billion Medicare prescription drug benefit plan, CongressDaily reports. Graham was the "key author" of a similar Senate prescription drug benefit proposed last year. CongressDaily reports that the legislation, which could be formally introduced as early as next week, would "rely heavily" on formularies and pharmacy benefit managers to reduce drug costs. The new plan would require seniors to pay a $25 monthly premium, compared to premiums in last year's Democratic legislation that would have been as high as $67 based on income. Under the new proposal, the government would pay for half of coinsurance on drugs up to $4,000 annually and all costs over that amount (Fulton, CongressDaily, 4/30).