GOP Medicare Prescription Drug Plan Advances in House

By Christine Hall | July 7, 2008 | 8:28 PM EDT

( - The House is expected to take up a Medicare prescription drug bill next week that would for the first time give drug coverage to seniors in addition to the hospital insurance they already enjoy.

By a vote of 22 to 16, the House Ways and Means committee worked until the wee hours of the morning on Wednesday to pass the $305 billion GOP plan, despite the objections of Democrats, who believe the plan doesn't spend enough and leaves too much decision-making in the hands of private industry and beneficiaries.

In fact, committee proceedings were interrupted three times in the first half-hour by protesters chanting invectives about the so-called "donut" or gap in coverage under the GOP plan. The plan front-loads drug coverage to pay much of the drug costs for seniors with the lowest and highest drug costs but less for those who fall in between.

For example, the bill requires that seniors pay 20-to-50 percent of their own drug costs up to $2,000 and the full cost of their drugs between $2,000 and $3,800. Taxpayers would pay the full cost of drugs after $3,800 is spent out-of-pocket.

Tom Miller, health care analyst for the Cato Institute, said the reason for front-loading coverage was to win the political support of all seniors. Miller predicted that the set up would bust the budget in years to come. Rep. Jennifer Dunn (R-Wash.) said the plan was deliberately front-loaded to provide help to the most number of people.

The Bush administration praised House Republicans for passing a prescription drug bill out of the committee and urged the Senate to do the same.

"It's time to enact meaningful legislation to help seniors reduce the high costs of prescription drugs," said Health and Human Services Secretary Tommy Thompson, speaking at a Capitol Hill press conference on Wednesday.

"President Bush and I will work with both parties in Congress to get meaningful, affordable Medicare drug coverage enacted into law this year," he said.

HHS on Wednesday released an analysis of the Republican and Democratic plans, and predicted that the House Republican plan would result in a 60 to 85 percent cut in prescription drug prices for seniors who now pay full retail prices. HHS expects drug insurance to cost seniors around $34 per month.

The Senate Democratic drug proposal, by comparison, would raise retail prices by 15 percent or more, according to HHS, and impose monthly co-pays of $40 to $60. The result would be a 10-year cost to taxpayers of $600 billion or more, according to HHS.

The House Democratic plan would have cost taxpayers even more, says HHS -- $750 to $800 billion over ten years.

Democrats and liberal groups on Tuesday acknowledged that taxpayers would pay more under the Democratic plans. But "that's just plain what it costs" to provide good prescription drug coverage, Rep. Pete Stark (D-Calif.) told committee members at Tuesday's Ways and Means mark up.

Ways and Means committee chairman Bill Thomas (R-Calif.) defended the decision to front-load rather than base Medicare drug coverage on income.

"If the Cato Institute criticizes that we're giving too much away on the front end, then I guess we'll have to live with that...because they also assume that one of the preventive or wellness packages [in the GOP bill] would be a cold shower and oatmeal," said Thomas.

"You've got a kind of balance here if we're being criticized by both the extreme left and the extreme right," he said.

The GOP bill also works by giving seniors the freedom to choose among private insurance policies to be offered in the insurance marketplace.

Under current Medicare law, insurance companies offering Medi-gap (Medicare part B) coverage are prohibited from offering stand-alone prescription drug coverage. Instead, it must be bundled with other types of coverage.

The House commerce committee will consider the drug bill Wednesday before the final version heads to the House floor next week.

Speaking to reporters Wednesday, Senate Majority Leader Tom Daschle (D-S.D.) said there is a "reasonable possibility" that a Medicare prescription drug bill will be passed by both chambers and make it to the president's desk this year.

Even if the Senate's bill differs considerably from the House's, "they will pass something else, but we will go to conference" committee, said Daschle, where both chambers will have a second bite at the apple.

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