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House, Senate OK Prescription Plan

Both houses of Congress approved sweeping Medicare legislation early Friday to give seniors a prescription drug benefit while creating a broad new role for private insurance in the government-run program.

The twin votes - lopsided in the Senate, a squeaker in the House - set the stage for congressional talks on a final compromise measure on an issue that has produced nothing but stalemate across the years.

The Senate vote was a bipartisan 76-21. The Senate bill was centrist enough for Senate Majority Leader Bill Frist and Democratic Leader Tom Daschle to support it, despite concerns by some Democrats over gaps in coverage.

"We are one step closer to providing real health care security to seniors all across the nation," said Frist, of Tennessee.

Those most likely to see the biggest benefit are those who have the highest drug bills now, reports CBS News Correspondent Joie Chen.

Baltimore retiree Frank Ullrich spends $15,000 a year on prescriptions, even with the deductible and monthly premiums. Under the Senate bill he'd pay just about $5,000; under the House version, less than $4,000.

But someone like Virginia homemaker Sylvia Joseph, who pays $1,000 a year for her prescriptions, may find it costs more just to 'have' the drug coverage than she's already spending.

There is still a lot of resistance from conservatives who think neither bill does enough to encourage seniors to move into private health care plans.

The supporters of the Senate bill overcame a last-minute roadblock on a proposal to charge affluent seniors higher premiums for doctor and non-hospital services under traditional Medicare. It had the votes to pass, but Sen. Edward M. Kennedy, D-Mass., who has played a critical role in supporting the overall bill, demanded it be jettisoned.

The House, where passage was in doubt until GOP leaders prevailed on Reps. C.L. Otter of Idaho and Jo Ann Emerson of Missouri to switch their votes long after time for the roll call had expired, approved the bill by a one-vote margin of 216-215.

House Democrats attacked the GOP-crafted bill as an attempt to privatize Medicare and donned black armbands as if mourning the program's demise. "It's a sham," charged Rep. Fortney Stark, D-Calif.

Moments before final House passage, a costlier Democratic alternative was rejected, 255-175.

Administration officials and House GOP leaders struggled all day to lock up the votes needed to prevail. In addition to fielding complaints from conservatives worried about creation of a new government benefit, as well as lawmakers unhappy with reduced hospital payments, higher fees for home health care and other issues.

Vice President Dick Cheney went to the Capitol to lobby wavering conservatives in the hours before the House vote, emphasizing anew the importance that Mr. Bush attached to the legislation.

To further shore up conservative support, House GOP leaders pushed through a $174 billion companion measure in the hours leading up to the Medicare debate that would allow spending from tax-free savings accounts on health insurance and prescriptions.

While the bills differed widely in their details, they envisioned the most fundamental changes in Medicare since its creation during the Great Society of nearly four decades ago.

Under both plans, seniors would receive prescription drug coverage, paying monthly premiums, a deductible and co-payments. Both plans included a gap in coverage, as well as protection for seniors with unusually high annual expenses.

Beneficiaries would have access to prescription drug coverage, with plans to be offered by private insurance companies and partially subsidized by the government. Lower-income older people would receive greater help from the federal government with the cost of their drugs.

The drug coverage would begin in 2006. Until then, discount cards would be available that Republican officials said would reduce costs of prescription medicine by 15 percent or more.

In addition, the measures created a new managed care option for seniors, part of the administration's effort to modernize the program while introducing cost-saving measures that could shore up its finances.

The legislation envisions establishment of a series of regional preferred provider organizations, or PPOs, along the lines of insurance plans that now cover millions of working people.

Medicare beneficiaries could retain their existing coverage or switch. The government subsidy for their drug coverage would be the same, regardless of which plan they chose.

"Competition, choice, the marketplace, these are the concepts that will save Medicare for the coming decades," said Speaker Dennis Hastert, R-Ill. "Seniors will long remember if you vote for them today, but they will never forget if you vote against them."

In an effort to attack rising drug costs, both bills also include measures to speed access to generic medicine, and to allow importation of brand-name pharmaceuticals from Canada, where they are far cheaper than in this country.

Congress had tried to pass a prescription benefit for years without success. Last summer, compromise failed on a least four different measures. By passing a bill in 2003, Republicans in both Houses rob Democrats of an issue they have traditionally dominated.

However, important questions remain about the measure. Some analysts worry it will encourage employers to drop drug coverage for retirees. It's also unclear whether the gaps in coverage and deductibles will prevent many seniors from getting any benefit from the plan.

And the impact of the new, private involvement is unknown — partly because the Bush administration's top Medicare actuary has been threatened with being fired if he releases a report on that impact to Democrats.

Whatever compromise lawmakers work out, seniors won't see the benefit for another two and a half years -- it won't take effect until 2006.