Medicare Conference Committee Meets for First Time, Takes No Action

The conference committee tasked with reconciling the House and Senate Medicare bills (HR 1 and S 1) met for the first time July 15 and elected Rep. Bill Thomas (R-Calif.) as chair of the committee; however, the committee took no other action, the Washington Times reports (Dinan/Fagan, Washington Times, 7/16). Thomas said that the conference committee cannot begin work until it has received a Congressional Research Service analysis of the two bills' differences, the Los Angeles Times reports. President Bush canceled a July 15 meeting with conference committee members and instead met only with Senate Majority Leader Bill Frist (R-Tenn.) and House Speaker Dennis Hastert (R-Ill.) (Kemper, Los Angeles Times, 7/16). Besides Thomas, House conference committee members include Reps. Billy Tauzin (R-La.), Tom DeLay (R-Texas), Nancy Johnson (R-Conn.), Mike Bilirakis (R-Fla.), John Dingell (D-Mich.), Charles Rangel (D-N.Y.) and Marion Berry (D-Ark.). Senate conference committee members include Frist and Sens. Charles Grassley (R-Iowa), Orrin Hatch (R-Utah), Don Nickles (R-Okla.), Jon Kyl (R-Ariz.), Jay Rockefeller (D-W.Va.), John Breaux (D-La.), Tom Daschle (D-S.D.) and Max Baucus (D-Mont.). Both the House and Senate Medicare bills would offer all beneficiaries a stand-alone drug benefit and would increase the participation of private health plans in the program. The bills differ in several ways, including beneficiaries' out-of-pocket costs for the drug coverage, new deductibles for outpatient services, new coverage options, subsidies for low-income beneficiaries and payment systems for private health plans (Kaiser Daily Health Policy Report, 7/15). Conference committee members said they intend to meet again by early next week, the Washington Times reports (Washington Times, 7/16).

Lawmakers Discuss Passage of Bill
The conference committee meeting "consisted of little more than gentle jockeying for position," with "the hard work of compromise" expected to begin in the coming days, the AP/Houston Chronicle reports (Espo, AP/Houston Chronicle, 7/15). "If we get legislation out of this conference, which we will, it will be a victory for America's seniors," Grassley said (Pear, New York Times, 7/16). He added, "I don't want to do a strategy that's not at least 60-40, since conference reports can be filibustered." Breaux said that he hopes the committee members "will commit [them]selves to having a bipartisan product -- not one that has a one-vote margin in the House or Senate" (Rovner, CongressDaily/AM, 7/16). Baucus added, "We must pass legislation that has large support on both sides of the aisle in both chambers. If we do, the American public will know it's for real, not political" (Los Angeles Times, 7/16). However, Baucus said that the committee would not be able to accomplish much before Congress' August recess, CongressDaily/AM reports (CongressDaily/AM, 7/16). DeLay said that the committee would "take as long as it takes to get it right" and that finishing a compromise bill before the August break is unlikely (Los Angeles Times, 7/16).

Debating the House Competition Provision
According to the AP/Chronicle, some of the "key disputes" in the committee likely will center on a provision in the House bill that calls for direct competition between Medicare and private plans beginning in 2010. Republicans maintain the provision will hold down Medicare costs, and Democrats believe it would cause premiums to be higher for beneficiaries who remain in traditional Medicare (AP/Houston Chronicle, 7/15). The House bill "privatizes the entire Medicare program in seven years," Dingell said (Los Angeles Times, 7/16). He added, "That's not 2010 competition; that's 2010 destruction of Medicare." However, DeLay said that the committee must preserve provisions of the House bill that are intended to "hold down costs by introducing competition and introducing choice for seniors," adding, "I can't see a bill coming out of conference with less than that." But Baucus questioned whether Bush would endorse the competition provision, saying, "That's a steep hill to climb. My guess is the White House is much more interested in getting the bill passed" (Washington Times, 7/16). Nickles called the Senate bill the "biggest, most expensive expansion" of a government entitlement program in U.S. history, saying that he would only vote for a compromise bill if it makes Medicare "affordable and sustainable for future generations" (Los Angeles Times, 7/16).

AARP Calls for Improvements
AARP on July 15 issued a commentary on the House and Senate Medicare bills that contained "strong language for the cautious AARP" and objected to several provisions in the bills approved by the House and Senate, the New York Times reports. AARP Executive Director William Novelli said that the conference committee should drop the House competition provision because competition between traditional Medicare and private plans would undermine Medicare and substantially increase costs for older, sicker beneficiaries, who are more likely to remain in traditional Medicare. Novelli added that the committee also should drop a provision in the House bill that calls for beneficiaries with annual incomes higher than $60,000 to have higher out-of-pocket expenses before catastrophic drug coverage would begin (New York Times, 7/16). In addition, Novelli opposed the gaps in drug coverage contained in both bills, as well as Senate bill provisions that call for those people eligible for both Medicare and Medicaid to continue to receive drug coverage through Medicaid (Rovner, CongressDaily, 7/15). However, Novelli said that the committee should adopt a Senate provision that calls for the government to directly provide a drug benefit in areas where private drug plans choose not to, the New York Times reports. Novelli said that Congress should "produce a better bill" and that if the final compromise bill does not "correct serious problems that exist in both bills, [his group] will not hesitate to oppose it" (New York Times, 7/16). Letters from AARP to Hastert and Frist are available online.

Deficit Projections Could Impact Medicare Reform
In a development that could hamper Medicare reform legislation, the White House Office of Management and Budget on July 15 projected that the fiscal year 2003 federal budget deficit will be $455 billion, which would represent the nation's largest-ever budget deficit and is $150 billion more than what the OMB predicted five months ago, the New York Times reports. The OMB said the deficit would increase to $475 billion in fiscal year 2004 and would be $304 billion in fiscal year 2005, $238 billion in fiscal year 2006, $213 billion in fiscal year 2007 and $226 billion in fiscal year 2008. All the deficits in future fiscal years include the $400 billion over the next 10 years that Bush has requested for Medicare reform and a prescription drug benefit (Rosenbaum, New York Times, 7/16). According to the Los Angeles Times, the increasing deficit "could make the climate less favorable to Bush's plan to establish a prescription drug benefit under Medicare." An unidentified senior House Republican aide said that the deficit report "doesn't come at a good time," adding, "There is some consternation about how these numbers will play out in Medicare." In addition, the increasing deficit could help a group of conservative House Republicans who object to the current Medicare reform legislation, the Los Angeles Times reports. "It's going to be harder [to pass a Medicare prescription drug bill]," House Budget Committee Chair Jim Nussle (R-Iowa) said, adding, "This should give everybody pause with respect to spending" (Hook/Chen, Los Angeles Times, 7/16). Joshua Bolten, the White House budget director, said that "if steps were not taken, problems would arise early in the next decade" because government spending on Medicare and Social Security will have to increase as the baby boom generation ages, the New York Times reports (Rosenbaum, New York Times, 7/16).

Bills' Effect on Low-Income Beneficiaries
The Hartford Courant on July 16 examines how the House and Senate Medicare bills would affect low-income beneficiaries -- a difference the paper says has "attracted little attention," except from policy experts. Beneficiaries would pay "substantially more" out-of-pocket for drug coverage under the House bill than the Senate bill because subsidies for low-income beneficiaries under the House bill are less generous than those under the Senate bill, the Courant reports. AARP Policy Director John Rother said, "The Senate bill is much more generous to seniors ... by a very large margin." Families USA Executive Director Ronald Pollack added, "The bill that recently passed the Senate can provide significant relief for the millions of low-income seniors most in need of help. Unfortunately, the opposite is true about the House-passed bill, which provides very meager help for low-income seniors and will keep drugs unaffordable." Some experts also criticized a measure in the Senate bill that would cover drug expenses for about seven million seniors dually eligible for Medicare and Medicaid through Medicaid. Doing so could expose such beneficiaries to the "ups and downs of state budgets," according to Timothy Jost, a Washington and Lee University law professor who specializes in health issues, the Courant reports. Tricia Neuman, a Kaiser Family Foundation vice president and director of the foundation's Medicare Policy Project, said, "That's a major departure from the universal nature of the Medicare program today." Marilyn Moon, an Urban Institute economist, said, "The 17% of beneficiaries who are dually eligible should be at the top of the list of concerns for reform and not shunted to the bottom." Gail Shearer, director of health policy analysis for Consumers Union, has asked conference committee members to reject the Senate approach on dually eligible beneficiaries' drug costs, according to the Courant (MacDonald, Hartford Courant, 7/16).

Resources
The Kaiser Family Foundation has released a side-by-side comparison of the House and Senate Medicare bills prepared by Health Policy Alternatives. The comparison, which includes information on beneficiaries' premiums, cost-sharing, out-of-pocket costs and subsidies under both bills, is available online. In addition, a webcast of an American Enterprise Institute briefing on the Medicare bills is available online at kaisernetwork.org.

Broadcast Coverage

• NPR's "Morning Edition" July 16 reports on the potential role that pharmacy benefit managers will have in administering a Medicare drug benefit. The segment includes comments from Neuman; Shearer and Barrett Toan, CEO of PBM Express Scripts (Silberner, "Morning Edition," NPR, 7/16). The full segment is available online in RealPlayer.
  
• PBS' "NewsHour with Jim Lehrer" on July 15 discussed the House and Senate Medicare bills with Health Policy and Strategy Associates President Robert Laszewski and Urban Institute President Robert Reischauer (Suarez, "NewsHour with Jim Lehrer," PBS, 7/15). The full transcript and audio or video of the segment in RealPlayer will be available online within 24 hours of the broadcast.