The approach parts ways with President Bush, who wants to encourage seniors to move to managed care by giving them a more generous prescription drug plan. The president wants to give seniors the option to enroll in a Preferred Provider Organization under Medicare, a managed care system used in the private insurance market.
Sen. Olympia Snowe, R-Maine, said a better benefit for seniors who leave the traditional fee-for-service system to join a PPO is "a road that leads to nowhere because those networks don't exist in parts of the country."
Sen. John Breaux, D-La., said a prescription drug plan without equal drug benefits would not get the bipartisan backing that the Senate's Republican leaders want to build. He said Medicare recipients would have other reasons to join a PPO, including better preventative care and longer hospital coverage.
Both moderates are members of the Senate Finance Committee, the panel that will take the first stab at drafting legislation to add a drug benefit to Medicare at an expected cost of $400 billion over a decade.
Breaux outlined a plan Tuesday that would give seniors help with the first $3,450 in prescription drug costs. The government would pay 90 percent of drug costs over $5,000. Seniors would be expected to pay for drug costs between $3,450 and $5,000 — a gap that effects less than 8 percent of seniors.
Anticipating that the drug benefit will mark the largest expansion in the health care program since its creation in 1965, lawmakers asked Finance Committee Chairman Charles Grassley, R-Iowa, to hold a hearing on the drug options before debating the bill next week.
The senators also asked that congressional budget experts estimate the cost of current proposals. Committee members left a meeting late Tuesday hopeful that they will strike a bipartisan agreement.
"It will be bipartisan — bipartisan out of committee, bipartisan on the floor," said Senate Majority Leader Bill Frist, R-Tenn.
Breaux said creating parity in drug benefits for all Medicare recipients runs the risk of alienating both conservative Republicans and liberal Democrats. Like the president, conservative Republicans want to give seniors better drug benefits if they join a PPO as an incentive to move seniors to private networks, an option they say would help hold down escalating medical costs.
Many Democrats want to keep the drug benefit entirely within the traditional government-run program.
"There's a lot of loose talk these days about privatizing Medicare," said Sen. Byron Dorgan, D-N.D. "This is a critically important debate in terms of whether senior citizens will have access to decent health care in the years ahead."
House and Senate leaders plan to shape their versions of the prescription drug benefit this month. The Senate Finance Committee plans to debate their plan next week. Senate leaders left open the last two months of June for debate over the bill.
House Majority Leader Tom DeLay, R-Texas, said two committees will work out their version of the bill in time for House debate before Independence Day.
By Mary Dalrymple