This week, the House and Senate both approved their versions of a proposal to provide a prescription drug benefit to seniors through Medicare. Differences between the House and Senate proposals will be worked out in a conference committee after the July 4th recess.
Senate Action
After two weeks of debate, the Senate passed, 76-21, its version of the Medicare Prescription Drug and Modernization Act (S. 1) on June 27.
Beginning in 2006, S.1 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 preferred provider organizations (PPOs). 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. S. 1 also would include a provision not included in the House bill that would offer a “fallback” plan for the government to step in to help seniors in geographic areas where at least two private plans do not offer coverage.
In praising the bill, Sen. Susan Collins (R-ME) reflected on the many constituents who had contacted her about their difficulties paying for prescription drugs. “I’ll never forget an elderly woman coming up to me in the grocery store in Bangor and saying to me she was only able to get half the number of pills her doctor had prescribed because otherwise she would not be able to buy the food she needed.”
Several Senators thought the bill should do more for seniors. Sen. Debbie Stabenow (D-MI) was outraged that the cost of the bill was only $400 billion and cited recent tax cuts as the reason. “The fact that we are talking about an inadequate benefit that ends, that leaves coverage gaps of 3 or 4 months a year for our seniors, the fact that we are talking about an approach that does not do what they have asked us to do, is because of decisions made to take revenue and instead of investing it in health care for older Americans, instead of investing it in strengthening Social Security for the next generation, the decision was made to eliminate that revenue.”
During consideration of the bill, Sen. Richard Durbin (D-IL) offered a Democratic substitute amendment that would have offered prescription drug coverage within the traditional Medicare program. Under the substitute, beneficiaries would not have been required to pay an annual deductible and Medicare would have been able to use its nationwide purchasing power to negotiate lower drug prices. In addition, beneficiaries who had exceeded $4500 would have had 100 percent of their drug costs covered for the rest of the year. The amendment was defeated, 39-56.
Another amendment, which was overwhelmingly defeated, was an attempt by Sen. Jeff Sessions (R-AL) to strike a provision in the bill that 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. The amendment was defeated, 33-65.
The Senate approved the following amendments:
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Prior to final approval of the bill, the Senate approved, 71-26, a compromise amendment worked out between Finance Committee Chair Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) that would authorize $6 billion for preventive care and chronic disease management in the traditional Medicare fee-for-service program and would authorize $6 billion for a subsidy to private drug benefit plans. The 2004 budget resolution (H. Con. Res. 95) designated $400 billion over ten years for a Medicare reform package that would include a prescription drug benefit. The Congressional Budget Office (CBO) estimated that the Senate bill (S. 1) would only cost $389 billion over ten years. Senate Democrats and Republicans spent a good part of the week arguing over how best to spend the additional $12 billion until this compromise was reached.
House Action
On June 27, just after 2:00 AM, the House passed its new draft of the Medicare Prescription Drug and Modernization Act (H.R. 1) by a vote of 216-215. Another bill passed by the House earlier that same day, H.R. 2596 (see article on health savings accounts), was incorporated into H.R. 1.
As in the proposals (H.R. 2473) approved last week by the House Ways and Means and Energy and Commerce Committees (see The Source, 6/20/03), the bill would provide Medicare beneficiaries with the option of purchasing private coverage of prescription drugs, either through stand-alone “drug only” insurance plans, through existing HMOs, or through PPOs. Beneficiaries would pay a $250 annual deductible, and 20 percent of the first $2,000 a year in drug costs. After exceeding $2000, beneficiaries would be responsible for 100 percent of costs up to an out-of-pocket cap of an additional $3,500. Those with “catastrophic costs” exceeding the $3,500 cap would have 100 percent of their drug costs covered for the rest of the year. Although the bill does not set a specific premium that beneficiaries would pay for drug coverage, CBO estimates that the premium would be $35 per month.
A number of provisions to reform the Medicare program are also included in the bill: 1) unlike the Senate bill, it would establish a system under which private insurers would compete with the traditional Medicare program to offer hospital and physicians services currently provided under Medicare Part A and Part B; 2) it would rename the current Medicare+Choice program, under which HMOs provide Medicare benefits to their enrollees, the Medicare Advantage program; 3) it would establish, for the first time, a copayment for home health services; 4) it would include a number of changes to the Medicare program to increase payments to health care providers in rural areas; 5) it would provide coverage for cholesterol and blood lipid screenings and would waive the Part B deductibles for colorectal cancer screening tests; and 6) it would provide immediate coverage for oral anticancer drugs through a demonstration project.
Finally, the bill includes two provisions not considered by the House Ways and Means or Energy and Commerce Committees. These include provisions that would expedite the introduction of generic drugs into the marketplace and provisions that would permit pharmacists and wholesalers to import prescription drugs from Canada.
During debate on the rule, a number of Democratic women wearing black arm bands lined up to voice their opposition to the Medicare bill. Many of them argued that the Republican legislation would be harmful to the women who needed it most. Rep. Diane Watson (D-CA) pointed out that, “Women, indeed, are the face of Medicare. Women constitute 58 percent of the Medicare population at 65, and women constitute 71 percent of the Medicare population over the age of 85…Research suggests that women on Medicare spend 20 percent more on prescription drugs than their male counterparts.”
Rep. Jennifer Dunn (R-WA) disagreed. “In this bill, we help seniors on fixed incomes and those with high drug costs. A woman, for example, with an income of less than $14,400 today, which is 150 percent of poverty, will receive assistance from the federal government for prescription drugs. While all seniors will benefit, nearly 11 million or 34 percent of Medicare beneficiaries will qualify for additional assistance when this bill is fully implemented.”
During consideration of the bill, Rep. Charlie Rangel (D-NY) offered a substitute amendment that would have established a Medicare prescription drug benefit, but would not have relied on private insurers to provide the coverage. Under the substitute, beneficiaries would have paid a monthly premium averaging $25, a $100 annual deductible, and 20 percent of the first $2,000 a year in drug costs. After exceeding $2000, beneficiaries would have had 100 percent of their drug costs covered for the rest of the year. The substitute also would have included proposals as approved by the Senate earlier this week that would authorize the HHS Secretary to create regulations allowing pharmacists and wholesalers to import prescription drugs from Canada and would have brought generic drugs to the market more quickly by making it more difficult for pharmaceutical companies to extend their patents for brand name drugs. The substitute would have struck the bill’s provision establishing a copayment for home health services. The amendment was defeated, 175-255.
Rep. Mike Thompson (D-CA) offered a motion to recommit that would have struck the text of the bill and added text supported by the Blue Dog Coalition that would have provided a prescription drug benefit under Medicare and made changes in the payment for rural providers while keeping the total 10-year cost of the program within the $400 million cap set in the 2004 budget resolution (H.Con.Res 95). The motion was defeated, 208-223.
