On July 14, the House defeated, 191-221, a motion to instruct conferees on the Medicare Prescription Drug and Modernization Act (H.R. 1). H.R. 1, as passed by the House on June 27 (see The Source, 6/27/03), 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. The Senate passed its version of the Medicare reform bill (S. 1) that same afternoon.
Rep. Lincoln Davis (D-TN) offered a motion to instruct conferees that would have stripped the House bill’s provision under which private insurers would compete with the traditional Medicare program in 2010. The motion also would have included a provision in the Senate 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.
Rep. Rosa DeLauro (D-CT) voiced her support for the motion and her opposition to the underlying bill stating, “let me just say, seniors beware…this is the beginning of the end of Medicare.” Rep. Paul Ryan (R-WI) disagreed. “The reforms that are in question that are being jettisoned or gutted in this motion to instruct are the very important reforms that get us to solvency for the baby boom generation.”
A number of differences exist between the House and Senate Medicare bills:
In the House bill, 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. Individuals with an annual income exceeding $60,000 and couples exceeding $120,000 would be responsible for approximately $12,000 in out-of-pocket expenses before the “catastrophic” coverage would begin. Although the bill does not set a specific premium that beneficiaries would pay for drug coverage, the Congressional Budget Office (CBO) estimates that the premium would be $35 per month.
H.R. 1 would incorporate the Health Savings and Affordability Act (H.R. 2596), which the House passed on June 26 (see The Source, 6/27/03). The bill would allow individuals to contribute $2,000 annually to health savings accounts; families could contribute $4,000 annually. In order to be eligible for the accounts, employees would have to either participate in an employer-sponsored health plan that has a minimum deductible of $500 for an individual and $1,000 for a family or be uninsured. Both individual and employer contributions would be tax deductible, although employers would not be required to make contributions to the accounts.
A number of provisions to reform the Medicare program are also included in H.R. 1: 1) it would establish a system under which private insurers would compete with the traditional Medicare program to offer hospital and physician 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.
In the Senate 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. S. 1 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. The bill also would require states to continue to cover the prescription drug costs of the estimated 6 million beneficiaries who are eligible for both the Medicare and Medicaid programs.
The House and Senate will work out the differences in the two bills in a conference committee that began meeting on July 15.
