Drug coverage would not begin until 2006, although seniors could purchase a drug discount card beginning next year.
The $395 billion legislation — a top priority for President Bush — faces one last, low hurdle — passage by the Senate — which was expected Tuesday. Both sides acknowledged the final vote was not in doubt after lawmakers on Monday cleared away the last efforts by Democratic opponents to stop the legislation.
The House had passed the bill near dawn on Saturday on a 220-215 vote. Final approval in the Senate would give Bush and the congressional Republican majorities a significant legislative and political triumph on an issue that Democrats long have exploited in political campaigns.
Senate Majority Leader Bill Frist, R-Tenn., called it a "historic" and "momentous" day as lawmakers broke years of deadlock over revamping Medicare.
As CBS News Correspondent Wyatt Andrews reports, the strongest opposition came from liberal Democrats who hotly opposed a provision to allow HMOs to compete with Medicare in six cities.
"What this is is a wolf in sheep's clothing," said Sen. Hillary Rodham Clinton, D-N.Y.
"It is the beginning of the unwinding of Medicare, the replacing of Medicare with the private sector," said Sen. Edward Kennedy, D-Mass. He predicted Republicans would go on to attack Social Security after next year's election.
President Bush was eager to sign the bill into law.
"Modernizing Medicare will make the system better and enable us to say to seniors we kept our promise," Mr. 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.
The GOP-controlled House, with Speaker Dennis Hastert, R-Ill., making the issue a priority, has approved Medicare drug legislation in earlier years. But the Senate deadlocked twice in the recent past, once with Republicans in control, the other time when Democrats held a majority.
Mr. Bush's decision to back legislation, coupled with Frist's ascendancy to the position of majority leader, changed the political equation in the Senate. Both houses approved measures in June, the Senate version gaining bipartisan support but the House bill clearing principally on the votes of conservative Republicans.
Under the legislation, the prescription drug benefit would begin in 2006. In the interim, seniors would be eligible to purchase the Medicare-backed discount drug card, at a cost estimated at $35 a year, that the administration estimates would mean savings of between 15 percent and 25 percent off retail prices. Critics argue those estimated savings are wildly inflated.