Bush Threatens Medicare Veto

With members of Congress up in arms about the new soaring cost estimate for the Medicare prescription drug benefit, President Bush served notice Friday that he will not allow the plan to be rolled back, reports CBS News Correspondent Mark Knoller.

"Any attempt to limit the choices of our seniors and to take away their prescription drug coverage under Medicare will meet my veto," Mr. Bush said at a swearing-in ceremony for Mike O. Leavitt, the new secretary of Health and Human Services.

Mr. Bush has yet to veto a single bill in his more than four years in the White House.

The administration now concedes the drug coverage, which starts in 2006, will cost taxpayers $723 billion over the next ten years, nearly $200 billion more than earlier projected. The administration says that's because the previous decade-long projection covered fewer years.

Mr. Bush pledged this week to "deal with the unfunded liabilities of Medicare" once Social Security is overhauled as he has proposed. But lawmakers long skeptical of the administration's cost estimates of the prescription drug benefit said the new, higher price tag hurt the White House's credibility on this issue.

CBS' John Roberts reports that Democrats want to reopen the bill and change it to allow Medicare to negotiate for lower drug prices. And even some Republicans who'd worried about the financial burden of an enormous new entitlement seemed


"We received $400 billion estimates," Sen. Olympia Snowe, R-Maine, said. "So now, what is driving these issues – we have to know."

However, White House officials say the new estimate isn't a surprise because it's for a period two years farther down the road, when the drug benefit has been fully phased in.

"Our estimates of the cost of the Medicare prescription drug benefit are the same as they were before," Mark McLellan, of the Centers for Medicare and Medicaid Services told Roberts. "Now we're into 2005 so we're looking further into the future."

The new figure for years 2006 through 2015 is much higher than the $534 billion cost calculated for years 2004 through 2013. That's because under the previous decade-long projection, the benefit didn't exist for two of the 10 years.

Congress passed the prescription drug benefit at the end of 2003, but except for some low-income seniors, it delayed making it available until January 2006.

Nonetheless, several lawmakers said they had been deceived.

"This new information further demonstrates what appears to be an attempt to dupe Congress and win passage of the legislation," said one such lawmaker, Sen. Dianne Feinstein, D-Calif., calling for an investigation by the Senate Finance Committee.

Some Republicans long skeptical of the administration's estimates also expressed alarm at the escalating costs as more people reach age 65 and qualify for it and drug prices continue to rise. The administration estimates that the number of people covered by the prescription benefit will rise in the first decade from 36.9 million people covered in 2006 to 45.8 million people in 2015.

"I do think we are going to have to go back and re-address it," said Senate Budget Committee Chairman Judd Gregg, R-N.H.

Lawmakers used the revised estimate to revive proposals to allow drug importation from Canada and to let the federal government negotiate drug prices. Both are now forbidden.

Congress narrowly approved the drug legislation in 2003 after an extraordinary all-night debate. At the time, Republican leaders assured wavering lawmakers that the program would cost $400 billion, including expected savings. The administration estimated the cost at $534 billion two months later, after the law was enacted.

White House Budget Director Joshua Bolten said the new price tag of $724 million reflects $134 billion in savings the government expects because states are paying some drug costs, $145 billion more from beneficiaries' premiums and $200 billion in savings by switching some Medicaid prescription benefits to Medicare.

Under the benefit:

  • Participants must pay monthly premiums that are expected to average $35 in 2006.
  • The participants must pay out of their pockets the first $250 in pharmacy bills.
  • Medicare will then pick up 75 percent of the next $2,000 in prescription expenses.
  • Then a gap is built into coverage, during which participants must pay all drug costs until the total tops $5,100.
  • The government will then pay 95 percent of prescription bills above $5,100 a year.