By Patricia Barry
March 2002

	Join the Discussion: Medicare Reform

Shifting budget priorities and political gridlock cloud the outlook for adding a prescription drug benefit to Medicare this year.

"No question about it," says John Rother, AARP director of policy, "passing a comprehensive drug benefit will require a hard struggle."

Meanwhile, a new proposal in President Bush's 2003 budget request focuses on helping low-income beneficiaries through expanded state assistance programs.

In what has been described as a "wartime budget," with the lion's share going to defense and homeland security, Bush proposes $190 billion over 10 years to reform Medicare, finance a comprehensive drug benefit and pay for other changes.

More than a third of that amount—$77 billion—would be earmarked for low-income assistance. The money would be given to the states to expand drug assistance programs.

In effect, the proposal offers a second strategy for providing interim relief from high drug prices, White House aides say, in addition to the Medicare drug discount card Bush proposed last year.

Administration officials stress the new proposal doesn't mean the president is backing off from a benefit that would cover all Medicare beneficiaries. "We are committed to doing a comprehensive drug benefit," says Medicare chief Tom Scully. "In the meantime the most vulnerable people without drug coverage will get something, while Congress decides what the bigger benefit will be."

Politically, critics say, the plan will give Republicans an opportunity to tell voters in this year's election campaign that their party has tried to make some progress on the contentious issue of prescription drugs.

But Bush's new proposal isn't a sure thing in this year's Congress. Many Democrats are skeptical. The president "is trying to finesse the fact there won't be a drug benefit" this year, says Rep. Pete Stark, D-Calif., a member of the powerful Ways and Means Committee.

Democrats, along with many Republicans, say the $190 billion sought by Bush is insufficient to finance even a modest comprehensive prescription drug benefit in Medicare.

In fact, leaders in both political parties say that at least $300 billion—the amount Congress set aside in its 2002 budget—will be needed for a drug benefit alone.