skip to main content

Senate Committee Approves Medicare Prescription Drug Coverage

During what was predicted to be a “marathon” mark-up on June 12, the Senate Finance Committee approved, 16-5, a bill (S. 1) aimed at providing prescription drug coverage to seniors and overhauling the Medicare program.

Beginning in 2006, the Prescription Drug and Medicare Improvement Act of 2003 would provide Medicare beneficiaries with the option of purchasing private coverage of prescription drugs, either through stand-alone “drug only” insurance plans, through existing health maintenance organizations (HMOs) or through new preferred provider organizations created under the bill. Beneficiaries would pay a monthly premium of $35, then a $275 annual deductible, after which the plan would cover 50 percent of drug costs up to a limit of $4,500. After exceeding $4,500, beneficiaries would be responsible for 100 percent of costs up to an out-of-pocket cap of an additional $3,700. Those who exceed the $3,700 cap would have 90 percent of their drug costs covered for the rest of the year.

Lauding the combined efforts of Democrats and Republicans on the committee, Chair Chuck Grassley (R-IA) stated, “We have a bipartisan agreement in this committee on legislation that will bring Medicare into this century. That means adding a prescription drug benefit…It means giving older Americans more health care choices.” Ranking Member Max Baucus (D-MT), who also voted for the bill, added, “We have before us the opportunity to end the painful choice that millions of our seniors are now forced to make, between filling their prescription and buying food.”

The Congressional Budget Office (CBO) estimated that the proposed drug benefit would cost $408 billion over the next ten years. Senate Budget Committee Chair Don Nickles (R-OK) opposed the bill and warned that the cost could actually soar to $800 billion over a decade stating that, “I’m worried we’re creating a system that might not be affordable for future generations.” Sen. Bob Graham (D-FL) also opposed the bill and called it, “a major step toward the privatization of Medicare.”

A bill (S. 845) sponsored by Sen. Graham was included in the Medicare package. The Immigrant Children’s Health Improvement Act would allow states to extend State Children’s Health Insurance Program (SCHIP) benefits to legal immigrant children and Medicaid benefits to legal immigrant pregnant women. Rep. Nickles offered an amendment to have this provision removed from the bill, but it was defeated, 8-13.

During consideration of the bill, the committee approved a number of amendments by voice vote, including:

  • an amendment by Sen. Olympia Snowe (R-ME) that would give the Secretary of Health and Human Services the authority to make adjustments in premiums and utilization;
  • an amendment by Sen. John Breaux (D-LA) that would allow a doctor to transfer patients from specialty hospitals to a general hospital in which the doctor has an interest;
  • an amendment by Sen. Bill Frist (R-TN) that would allow a certified hospital to contract with others to provide core services. The amendment also would address hospital services by nurse practitioners; and
  • an amendment by Sen. Breaux that would bar publication of certain regulations.

The committee defeated the following amendments:

  • an amendment by Sen. Tom Daschle (D-SD) that would have capped premiums in any area at no more than 5 percent above the national average. The amendment was defeated, 7-14;
  • an amendment by Sen. John Rockefeller (D-WV) that would have allowed seniors in certain cases to obtain their drug benefits from Medicare, while obtaining other health benefits from Medicare-supported outside health plans. The amendment was defeated, 7-14; and
  • an amendment by Sen. Rockefeller that would have encouraged employers not to drop the drug coverage they are currently providing to their workers. The amendment was defeated, 6-15.

The Senate is set to begin its debate of S. 1 on Monday, June 16. The House Ways and Means and Energy and Commerce Committees are scheduled to consider the House bill (as-yet-unnumbered) on Tuesday.