Cost of Prescription Drug Legislation Will Determine Passage, CQ’s Goldreich Says

Money could the key to passing a Medicare prescription drug benefit in the Senate, where members last week defeated three bills, Congressional Quarterly reporter Samuel Goldreich says in this week's "Congressional Quarterly Audio Report" (Goldreich, "Congressional Quarterly Audio Report," 7/29). After the failure of three drug benefit measures last week, Senate Finance Committee Chair Max Baucus (D-Mont.) and Sen. Edward Kennedy (D-Mass.) continued to work on a compromise to combine competing Democratic- and Republican-backed proposals for a comprehensive drug benefit that were defeated earlier in the week. Under a compromise, Medicare would begin providing drug coverage in 2005 and private insurers and health plans would contract with the government to offer the benefit in future years. Insurers would be required to provide benefit packages similar to those proposed in the Democrat-backed plan. Insurers would slowly assume the financial risk of providing coverage, but the government would limit their potential losses and profits. Medicare would deliver the benefit in areas where private insurers do not. Prior to the defeat of the original legislation, most Democrats supported a proposal by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.) that would have provided a comprehensive benefit at a cost $594 billion over seven years, while most Republicans supported a proposal by Sens. Charles Grassley (R- Iowa), Olympia Snowe (R-Maine), Orrin Hatch (R-Utah), John Breaux (D-La.) and James Jeffords (I-Vt.) that would have cost $370 billion over 10 years.

The Low-Income Option
Meanwhile, Graham and Sens. Jeff Bingaman (D-N.M.) and Blanche Lincoln (D-Ark.) have proposed a competing bill that would provide drug benefits only to low-income Medicare beneficiaries. The plan, which expands on a proposal by Sens. Chuck Hagel (R-Neb.) and John Ensign (R-Nev.) that was defeated July 24, would spend $400 billion to provide comprehensive prescription drug coverage for people with incomes less than 150% or 200% of the federal poverty level. The proposal also would cover 90% of drug costs over $4,000 for all Medicare beneficiaries (Kaiser Daily Health Policy Report, 7/26). While Senate Majority Leader Tom Daschle (D-S.D.) said he supports a drug benefit targeted at low-income beneficiaries, he also "has given the nod" to a more comprehensive proposal, Goldreich says. Meanwhile, Minority Leader Trent Lott (R-Miss.) said he cannot support any proposal that costs more than $400 billion.

Debate of Limiting Malpractice Awards
Senate leaders have also scheduled a vote for Tuesday on an amendment to prescription drug legislation (S 812) that would cap medical malpractice jury awards and lawyers' fees, Goldreich says. The amendment, proposed by Sen. Mitch McConnell (R-Ky.), would limit punitive damages to twice the amount of what a jury awards for economic damages plus pain and suffering. The legislation would also limit lawyers' contingency fees to 33% of the first $150,000 of damages and 25% of damages beyond $150,000. While the amendment does not "go as far" as a proposal announced by President Bush last week, which would limit non-economic damages to $250,000, it is still opposed by most Democrats, who say the legislation is "just an effort to bail out insurers who've watched their profits tumble with the stock market." Democrats oppose the measure because it would "make collecting punitive damages all but impossible" because it would require plaintiffs to provide "clear and convincing" evidence that a doctor or hospital intended to hurt them, Goldreich says. He concludes that "everyone knows [the amendment] will fail" (Goldreich, "Congressional Quarterly Audio Report," 7/29).

Goldreich's report is available online.