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Medicare reform passes in Senate; awaits Bush's signature
November 25, 2003

Washington, D.C. — (AP) - The Senate gave final congressional approval Tuesday to the most sweeping changes to Medicare since its creation in 1965, including a new prescription drug benefit for 40 million older and disabled Americans. The 54-44 vote sends the bill to President Bush, who is eager to sign it into law. Minnesota Sens. Mark Dayton and Norm Coleman voted on opposite sides of the bill. Dayton, a DFLer, voted against the measure, while Coleman, a Republican, voted in favor.

Supporters said the $395 billion measure, which gives private insurers a large new role in health care for seniors, was a long overdue change for the 38-year-old Medicare program.

Seniors "will finally have the prescription drug coverage they need and the choices they deserve," Senate Majority Bill Frist of Tennessee said. "At the same time, it preserves traditional Medicare."

Democratic opponents, resigned to defeat, complained that the bill was a giveaway to insurers and drug companies. Sen. Edward M. Kennedy, D-Mass., said it will dump seniors "in the cold arms of the HMOs."

"It didn't have to be this way," Kennedy said.

Drug coverage would not begin until 2006, although seniors next year will be able to purchase a drug discount card that officials said could reduce their pharmacy bills by 15 to 25 percent.

Bush sees signing the bill as fulfilling both his and many lawmakers' campaign promises.

"Modernizing Medicare will make the system better and enable us to say to seniors we kept our promise," Bush said after visiting Army troops Monday at Fort Carson, Colo.

But even as the White House cheered the progress on the Medicare bill, Congress dropped efforts to pass major energy legislation this year - another Bush priority - after repeated attempts failed to find two additional votes needed to push the bill through the Senate.

At its heart, the Medicare legislation was designed as a compromise, with the new drug coverage for all Medicare beneficiaries long sought by Democrats combined with a Republican-backed plan to give private insurance companies a vast new role in health care for the program's beneficiaries.

Under the legislation, seniors would be eligible beginning next year to purchase a Medicare-backed discount drug card at a cost estimated at $30 a year. The administration estimated the card would mean savings of between 15 percent and 25 percent off retail prices; critics argued those numbers were wildly inflated.

Beginning in 2006, the legislation would allow seniors to purchase coverage for their prescription drugs. GOP officials estimated the drug insurance premium would be $35 a month, with a $250 deductible. The coverage would pay 75 percent of costs after that until a recipient's drug costs reached $2,250. After that, there would be no drug coverage until a recipient's out-of-pocket expenses reached $3,600, or roughly $5,100 in overall prescription expenses. Above that level, insurance would pick up roughly 95 percent of costs.

The measure included subsidies for low-income seniors.

The scope of the bill went far beyond prescription drugs, though, including an additional $25 billion for rural hospitals and health care providers, a requirement for higher-income seniors to pay more for Medicare Part B coverage and billions of dollars to discourage corporations from eliminating existing coverage for their retirees once the new government program began.

The bill would satisfy other goals of conservatives, including creation of tax-preferred health savings accounts, open to individuals who purchase high-deductible health insurance policies.

Most contentious of all, the legislation would create a limited program of direct competition between traditional Medicare and private plans, beginning in 2010. Conservatives argued that would help bring down the cost of Medicare over the long run, while critics said it would privatize the program and lead to "cherry picking" of relatively healthy seniors by insurance companies and higher premiums for those seniors who remained under the government-designed benefit.

Over and over, supporters of the bill stressed that after years of gridlock, the opportunity to act was at hand. "If we don't do this at this time, it may be years" before another opportunity comes along, said Sen. Charles Grassley, R-Iowa, an architect of the bill.

Critics were unmoved. Senate Democratic Leader Tom Daschle called the bill a "bailout for the HMOs and insurance companies."

The bill's path to passage was cleared in the Senate on a pair of procedural votes, including a cliffhanger that was only decided when Sen. Trent Lott of Mississippi, the former Senate Republican leader, sided with the current GOP leadership despite his opposition to the legislation.

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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