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Prognosis Good For Medicare Rx

After years of partisan gridlock, legislation to provide prescription drug coverage under Medicare is gaining momentum in Congress.

"We all know that seniors don't want politics, they want prescription drugs," Sen. Charles Grassley, R-Iowa, the chairman of the Senate Finance Committee, said Thursday as he unveiled a bipartisan proposal with the panel's senior Democrat, Sen. Max Baucus of Montana.

The two said their plan would offer equal prescription drug coverage for seniors, regardless of whether they receive their health care under traditional Medicare or from a new managed care alternative — approved by President Bush — that the legislation would create.

The plan drew words of encouragement from the White House, although Mr. Bush stopped short of endorsing it, and from liberal Democratic Sen. Edward M. Kennedy of Massachusetts, although he said he would continue to fight for changes.

Senate Democratic leader Tom Daschle was critical, and issued a statement that said the agreement "falls significantly short" of Democratic goals. At the same time, he made no threat of a filibuster to block the bill, and several Democratic aides said they doubted there would be one.

Grassley arranged for a hearing on the proposal Friday, and said the committee would vote on the plan next Thursday. The rapid timetable prompted criticism from some Democrats, who said they had not yet received a copy of detailed legislation.

"This is a way big mistakes get made," said Sen. Kent Conrad, D-N.D., a member of the Finance Committee.

As outlined by Grassley and Baucus, the $400 billion legislation would contain two main features — a drug benefit for Medicare beneficiaries beginning in 2006, and a new preferred provider organization option for Medicare beneficiaries.

These PPO plans would offer preventive health coverage as well as protection against catastrophic health care expenses, neither of which is currently available under the government-run program.

Under PPOs, beneficiaries may see any physician for their care, but would pay higher costs — sometimes much higher — if the doctor were outside the insurance plan's network.

Under the legislation, beginning in 2004, Medicare beneficiaries would be eligible for a card that would allow them to purchase prescription drugs at a discount.

Two years later, the insurance coverage would begin.

Aides said that beneficiaries enrolled in traditional Medicare could purchase stand-alone drug coverage for a premium of roughly $35 a month.

The plan would carry a deductible of $275, after which the individual would be required to pay 50 percent of the bill until total costs reached $3,450. From that point until costs reached $5,300, the individual would pay 100 percent of the bill. Beyond that level, insurance would pay 90 percent, and the individual 10 percent.

The government would subsidize expenses for low-income beneficiaries.

The aides, who provided details on condition of anonymity, stressed that the details could change, depending on cost estimates yet to be prepared by the Congressional Budget Office.

Seniors who choose to enroll in the new PPO Medicare option would receive drug benefits as part of their overall coverage.

Mr. Bush favors a plan that would offer better drug benefits to seniors who enroll in PPOs in order to encourage Medicare recipients to join PPOs, part of an approach the administration says would modernize Medicare while strengthening its finances.

But Grassley and Baucus rejected that approach.

"The benefit is equal for everyone, both in traditional Medicare and in the enhanced Medicare we're setting up," Grassley said.

"Unlike the president's proposal, we're not using carrots to entice or coerce seniors into plans that might not work for them," added Baucus.

White House spokesman Ari Fleischer said in a statement that Mr. Bush was encouraged by the agreement. "We have a real opportunity to get something done this year," Fleischer said.

Congress has for years discussed adding prescription drug coverage to Medicare, but in the past compromise has eluded them. Last summer, the Senate rejected no less than four proposals, with the lawmakers divided over how to administer and finance the prescription program and who it should cover.

Kennedy, a leading Democratic voice on Medicare, said Grassley and Baucus had achieved a "major breakthrough in our effort to give senior citizens the prescription drug coverage under Medicare they need and deserve." At the same time, he said, "the fight is far from over."

Currently, Medicare does not pay for most prescription drugs; exceptions include cancer medications and drugs administered during hospital stays.

Medicare serves 41 million people, most of whom are senior citizens (about 6 million are disabled). There are two Medicare programs: Part A pays for hospital, visiting nurse and hospice care and is funded mainly by payroll taxes; Part B covers other medical are and is funded by general tax revenues and premiums paid by seniors.

Last year, Medicare spent $265 billion. As the number of senior citizens increases and the cost of health care continues to rise, that price tag will expand. By 2018, payroll taxes are expected to no longer cover the costs of Plan A.