GOP split on Medicare Changes

[Adam D]

GOP senators send Bush letter on Medicare, raising concerns
'Private sector incentives' encouraged
By Sean Loughlin and Jonathan Karl
CNN Washington Bureau
Thursday, June 19, 2003 Posted: 5:41 PM EDT (2141 GMT)


WASHINGTON (CNN) -- In a move that reflects growing conservative discomfort with a Medicare bill moving through the Senate, more than two dozen Republican senators sent a letter to President Bush Thursday, urging him to use his influence to make sure any changes to the government health program for the elderly are "fiscally responsible."

To that end, the senators emphasize "private sector incentives," a line certain to gain the attention of Democrats who say Republicans only want to dismantle Medicare.

"We must move away from a Medicare-style, price-control structure that stifles quality and innovation, not impose these old ideas on an expanded and reformed system," wrote the 27 senators in the letter dated June 19.

A bill that would bring the most sweeping changes to Medicare since its inception almost 40 years ago is under debate in the Senate, having already won speedy approval by the Senate Finance Committee. The legislation, the senators said, must not cost more than $400 billion over 10 years.

The bill would establish a prescription drug benefit under Medicare and would offer seniors a choice of coverage plans, including Preferred Provider Organizations. Unlike an earlier proposal from the president, however, the bill does not offer more generous benefits for those seniors who enroll in the private plans.

The administration had argued that such a move was necessary to control Medicare costs, but that proposal generated criticism from Democrats.

But these senators apparently believe more must be done in the legislation to "incorporate private sector, market-based elements," saying the survival of Medicare depends on it.


"If we don't act, or do not act appropriately, future attempts to make Medicare more fiscally sound and sustainable will only be more difficult, more expensive and less likely to succeed," they wrote.

Under the Senate bill, seniors would pay an average $35 a month premium and face a $275 annual deductible. Insurance -- administered by the government or by a private provider -- would cover half their prescription drug costs up to roughly $4,500.

Coverage would lapse between roughly $4,500 and $5,800, but would kick in at 90 percent when prescription bills exceeded about $5,800.

The House measure is similar, but it would require wealthier seniors to pay more of their costs for medicine and there would be a larger gap before catastrophic coverage kicked in. In addition, it would introduce more private competition into the system.

Senators on Thursday continued work on a series of amendments to the Medicare bill.

The Senate easily passed one amendment to make it harder for brand name drug manufacturers to extend their patents. Supporters of the amendment say the change would bring cheaper generic drugs to the market faster and would save Medicare up to $60 billion over the next ten years -- money that could be used to boost the Medicare bill's prescription drug benefit.

The bipartisan amendment, sponsored by Democrat Chuck Schumer of New York and Republican Judd Gregg of New Hampshire, passed 94 to 1. Utah Republican Orrin Hatch was the only no vote. A top Senate aide said the bill's supporters believe the House will pass a similar measure.

A separate amendment put forward by Senate Minority Leader Tom Daschle, D-South Dakota, failed by a vote of 56 to 39.

The Daschle amendment would have ensured that seniors pay a prescription drug premium close to $35. The current bill says seniors would pay an "average" of $35, but Daschle warned that within such a formula seniors could end up paying wildly different premiums, depending on where they live. For example, he said the premium could range from $16 in Florida to $99 in Connecticut.

Daschle's amendment would have required all drug plans to keep their premiums to within 10 percent of $35.

Four Democrats voted against their leader: John Breaux and Mary Landrieu of Louisiana, Zell Miller of Georgia and Max Baucus of Montana.

Baucus, who as the ranking Democrat on the Senate Finance Committee helped craft the overall Medicare bill, warned that the sheer volume of amendments anticipated over the next two weeks is throwing doubt over whether the bill can get passed on time.

[Adam D]

Lawmakers: Employers could dump retiree health coverage
Thursday, June 19, 2003 Posted: 5:48 PM EDT (2148 GMT)



WASHINGTON (Reuters) -- Lawmakers are fretting over an unintended consequence of the Medicare reform bill winding through Congress: that it could spur employers to dump health coverage for retirees.

Democrats and Republicans in Congress fear that if Medicare expands to pay for prescription drugs, private employers will be tempted to skim their retiree coverage. Government economists and private analysts share their concern.

According to an estimate by the Congressional Budget Office, up to 37 percent of employers would drop health benefits for retired workers under the Senate bill.

Senate Majority Leader Bill Frist, a Tennessee Republican, told reporters Thursday that Democrats and Republicans were working together to try to fix the problem.

"I'm asking all of our smartest staff people how you do that," he said. "Everybody's working on it."

Roughly 41 million seniors and disabled people get health coverage through the government-run Medicare health program.

Faced with rising health care costs, more employers are cutting back on retiree medical benefits -- even without the massive new Medicare program, which may offer skimpier benefits than many seniors now get in their retirement packages.

Underlying medical costs soared 9.6 percent last year after a 10 percent rise in 2001, according to a study released this month by the Center for Studying Health System Change.

Punishing the good
Private health insurance cover after retirement could drop to 10 percent of overall health costs by 2031, down from the 50 percent employers contribute now, according to Watson Wyatt research.

"I've heard the concern that employers might be inclined to eliminate their coverage," said Joe Martingale, national strategy leader for health care at Watson Wyatt consultants. "If Congress wants to keep employers, they need to do something to make this benefit fair all around."

The Senate bill covers half of drug costs up to $4,500 a year and then has a coverage gap until drug costs hit $5,800. Analysts say the bill inadvertently penalizes retirees and companies with good benefits because it does not include company payments on deductibles and co-insurance. This means seniors may struggle to reach the "catastrophic" threshold and could therefore end up paying a lot more out of pocket.

Authors of the Senate bill thought they had incentives to keep employers paying, but they are now revisiting the issue.

"I would think that if the government provides a reasonable benefit of the nature being talked about, that many employers would have their retirees look to Medicare first," before offering private coverage, said Harvey Sobel, a principal at Buck Consultants, which advises large employers.