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Down-to-the-Wire Battle Over Drugs
GOP, Dems Advance Competing Versions of a
Prescription Drug Benefit in Medicare
From now until November, Republicans and Democrats will bombard older Americans with pitches for their own versions of a Medicare drug benefit in the run-up to an election considered critical for control of Congress. But making these proposals attractive to older voters while staying within budget constraints has proved difficult. For several weeks House Republicans were repeatedly forced to delay bringing their bill to a vote because some of their own members objected to its provisions. "These delays underline the huge stakes involved in getting a voluntary drug benefit right," says John Rother, AARP's director of policy. "Adding drug coverage will be the most profound change in Medicare since it was enacted in 1965." Two leading proposals are now on the table. The House Republican bill, sponsored by Bill Thomas, R-Calif., and Billy Tauzin, R-La., finally passed the House June 28 by 13 votes. The Senate Democrats' plan, sponsored by Bob Graham, D-Fla., and Zell Miller, D-Ga., is expected to reach a vote this month.
"Of the two," Rother says, "the Senate bill offers more generous benefits, but of course it also costs the government more." Analysts say the likelihood of any bill becoming law this year will depend upon how forceful voters are in insisting that Congress act. Each side's scramble to produce a plan attractive to enrollees has raised the debate to a new level. Last month both sides sweetened their proposals. House Republicans dropped their benefit's average premium from $35 to $33. They also lowered its out-of-pocket spending limit from $5,000 to $4,500 to $3,800 and finally to $3,700. Senate Democrats changed the cost sharing in their plan from a 50 percent coinsurance to flat copayments. Our chart breaks down the main provisions of the two bills, although the exact wording of the Senate Democrats' proposal was not finalized as the AARP Bulletin went to press. This, and technical differences between the two bills, make them difficult to compare. House Republicans, for example, would rely on private insurance plans contracted to Medicare to offer the "equivalent" of a standard benefit set by the government. This means that the premium, estimated at $33 a month on average, could be higher or lower according to different plans and could vary by region. The Senate premium of $25 would be the same for everyone. The Senate Democrats propose a three-tier system of copays for different classes of drugs: $10 per prescription for generics, $40 for "preferred" brands and $60 for "nonpreferred" brands. No one yet knows which brand-name drugs would be "preferred." Both bills include provisions that have drawn criticism. Under the House Republican proposal, there is a gap in coverage known as "the doughnut hole." Though the bill's sponsors succeeded in narrowing the gap in June, beneficiaries would still have no coverage after they use $2,000 worth of drugs a year and before they rack up $3,700 a year in out-of-pocket spending (not including premiums). There is no coverage gap under the Senate Democrats' plan. But for that reason the Democrats' bill would need greater government funding. It would also expire after eight years and require Congress to reauthorize it. Its sponsors argue that reviewing such innovative legislation after a few years is reasonable. Critics say it is a device to make the cost seem lower. Estimated at $425 billion over eight years, it could cost $500-$600 billion over 10 years. Other critical issues include: Expenses and savings The most a beneficiary could spend in a year is $4,300 under the Senate Democrats' plan ($4,000 out-of-pocket spending limit plus $300 annual premium) and $4,096 under the House Republican plan ($3,700 out-of-pocket limit plus $396 annual premium). The latter is based on an estimated "average" premium of $33 a month.
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