GOP Faces Internal, External Obstacles on Prescription Drug Plan

By Christine Hall | July 7, 2008 | 8:29 PM EDT

( - Congressional Republicans this week are trying to agree among themselves on a Medicare prescription drug plan, which they hope to pass this month, before 2004 presidential politics squelches that possibility. But it's unclear who will be pleased with whatever plan the Republicans ultimately agree upon.

Despite the fact that Sen. Ted Kennedy (D-Mass.) was earlier this year predicting better than a 50-50 chance that Congress would pass a drug benefit in 2003, Senate Democrats, especially, have never warmed to GOP plans.

The president's fiscal year 2003 budget earmarked $400 billion over the next decade for a new Medicare prescription drug benefit, compared to the Democratic alternative plan estimated at a cost of $800 billion.

Senate Minority Leader Thomas Daschle (D-S.D.) has accused the president of trying to "coerce seniors out of Medicare and into HMOs" and opposed Bush's plan to allow senior citizens to shop for prescription drug coverage offered in the private market.

Ron Pollack, executive director of the liberal interest group Families USA, has said that any such move to "privatize" Medicare could prompt a Democratic filibuster that would require a 60-vote majority to overcome.

But even without a drug benefit, Medicare's actuaries predict that Lyndon Johnson's Great Society program will start running deficits at the end of 10 years.

That's left free market analysts skeptical that either party will come up with an affordable plan, especially since both Republicans and Democrats are trying to offer coverage to all seniors. A Senate GOP plan currently under consideration would cover drug costs for all seniors over $400 annually.

"If you're going to have prescription drug benefits that you can't afford, you'd better target it," urged the Cato Institute's Tom Miller.

Lawmakers, Miller believes, should adopt the politically less-sellable plan of directing scarce resources on the people who are in the most need - people who don't qualify for Medicaid assistance but can't afford prescription drugs or those who have high drug expenses relative to income.

"There are seniors out there who are low income and don't have coverage, there are seniors who get sick and need some very costly drugs," agreed Merrill Matthews, director of the Council for Affordable Health Insurance. "We need to make sure those who are in need get, have access to the drug...and frame the debate as something for those who are in need."

Miller predicts that any forthcoming compromise plan, especially on the Senate side, will "stuff a lot of pork into rural districts," courtesy of finance committee senators from rural states like Chairman Chuck Grassley (R-Iowa) and ranking Democrat Max Baucus (Mont.).

"They're going to have to do a lot of pig-ugly compromises to get something through," and that's just in committee, said Miller.

Polls have shown that a majority of Americans are aware that the Medicare program is in financial trouble yet support adding to it a prescription drug benefit.

An Andres McKenna Research voter poll conducted earlier this year found that 77 percent of Americans support a prescription drug benefit for seniors. A third said that they trusted Democrats more on Medicare matters, with Bush garnering just 25 percent support.

But analysts like Matthews and Miller warn that subsidizing drug benefits for all seniors will cause them to use more prescription drugs, ballooning the cost of the program and ultimately leading to drug price controls and rationing.

President Bush's plan would give seniors a choice of three drug plans beginning in 2006: traditional fee-for-service Medicare with prescription drug discount cards and catastrophic coverage; "Enhanced Medicare" to include a choice of private plans that offer drug coverage; and "Medicare Advantage" offered by private companies that includes plans with and without prescription drug coverage.

Low-income seniors would get further premium and cost-sharing subsidies.

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