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Phase-in Idea May Be Key to Passing Medicare Drug Plan

Just maybe, despite bitter partisan divisions, Congress can pass a prescription drug plan for seniors this year by phasing in Medicare reforms favored by Republicans. [IMGCAP(1)]

Under a plan beginning to be discussed by GOP Senators and their aides, present-day retirees could stay in traditional Medicare and receive a drug benefit, but younger workers would be offered a privatized system like the Federal Employees Health Benefit Program.

The plan, mentioned as a possibility by aides to Senate Majority Leader Bill Frist (R-Tenn.), is designed to meet the concerns of current seniors who are accustomed to seeing a favorite physician on a fee-for-service basis, and who overwhelmingly favor the existing Medicare system yet currently lack a drug benefit.

But Frist, President Bush and other Republicans — and some moderate Democrats, too — regard current Medicare as overly government-dominated and destined to run out of money when it attempts to meet the demands of the baby boom generation.

Under the phase-in idea, workers 55 years old and younger would be guaranteed, as they retire, a defined government contribution and offered a set of private insurance plans to choose from — all, presumably, offering a drug benefit, but some requiring extra payments for premium coverage.

Most current workers are covered by managed care plans of one sort or another — HMOs or PPOs, preferred provider organizations — and pay extra for out-of-plan service. They also receive a drug benefit.

Under FEHBP, Members of Congress and other federal workers are offered an array of private fee-for-service, PPO and HMO insurance plans offering a range of coverage and cost.

Even with a phase-in, passage of a drug plan by the 108th Congress is still an uphill struggle for all the reasons it has failed in past Congresses: ideology, politics and money.

And, in this Congress, the chances are complicated by a fierce partisan atmosphere, the early opening of the 2004 presidential campaign and White House missteps on the Medicare front.

Democrats charge that Republican ideas for “modernizing” or “reforming” Medicare are designed to force seniors into managed care and, ultimately, undermine the government’s guarantee of medical care for the elderly.

Senate Democrats have re-introduced a bill to simply add a prescription drug benefit to traditional Medicare. Last year, Democrats priced the bill at $600 billion over a six-year period, though Republicans charged that it would actually cost $1 trillion.

Bush’s fiscal 2004 budget proposes $400 billion for Medicare reforms and a drug benefit over a 10-year period, although John Rother, policy director for AARP, says that “something north of $500 billion” would be necessary for adequate coverage.

Even though $400 billion is more than double the amount that Bush proposed for Medicare reform and drugs last year, the administration stumbled badly in rolling out its proposals and now seems to have abandoned plans to submit a detailed program to Congress.

Instead, the White House plans to issue a set of principles for Medicare reform and drug coverage after leaks about its original ideas caused a storm among both Republicans and Democrats.

The leaked plan involved giving seniors the option of staying in traditional Medicare, but offering them a prescription drug benefit only if they enrolled in a managed care plan. Democrats naturally blasted the plan.

And so did Speaker Dennis Hastert (R-Ill.) in an interview with the Chicago Tribune last week. “I don’t think you can do it humanely. I don’t think you can do it politically. I don’t think it’s practical,” he said.

Frist, too, last week said that “you can’t ask a 75-year-old woman to leave the [Medicare] system” in order to secure a prescription drug benefit.

He also said the Senate Finance Committee “will write a bill from the ground up” and “doesn’t need a specific legislative proposal from the White House.”

Additionally, Frist identified Medicare reform and a drug benefit as the No. 1 priority of Senate Republicans in this Congress.

Frist and other Republicans on the Finance Committee held preliminary discussions on Medicare last Wednesday and reportedly were divided between those who favor an FEHBP-style overhaul and those who prefer the so-called “tripartisan” drug benefit floated last year.

The tripartisan approach, so named because its sponsors include Democratic Sen. John Breaux (La.) and Independent Sen. Jim Jeffords (Vt.), along with moderate Republicans, would add a drug benefit to traditional Medicare but would administer the benefit through private insurers.

Some health care lobbyists say Frist will end up backing the tripartisan approach along with Finance Chairman Chuck Grassley (R-Iowa), Sen. Olympia Snowe (R-Maine) and Sen. Orrin Hatch (R-Utah).

Others, though, put him in a camp with conservative GOP Sens. Don Nickles (Okla.), Rick Santorum (Pa.), Jon Kyl (Ariz.) and Trent Lott (Miss.), who favor privatization of Medicare.

If Republicans can come together on a plan, they may be able to pass it without significant Democratic support through the budget reconciliation process, which requires just 51 votes to pass a money measure.

Frist reportedly wants to pass a Medicare bill before Congress’ August recess — and before 2004 campaigning begins in earnest. The phase-in idea may be his ticket to doing so.

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