Senate OKs Medicare Reform

The Senate gave final congressional approval Tuesday to the most sweeping changes to Medicare since its creation in 1965, including a new prescription drug benefit for 40 million older and disabled Americans. The 54-44 vote sends the bill to President Bush, who is eager to sign it into law.

Supporters said the $395 billion measure, which gives private insurers a large new role in health care for seniors, was a long overdue change for the 38-year-old Medicare program.

For President Bush, it was just the medicine to help soothe his nagging poll numbers and allow him to claim ownership of what had been a signature Democratic issue, reports CBS News Chief White House Correspondent John Roberts.

"Year after year the problems in the Medicare system were studied and debated, and yet nothing was done," Mr. Bush said Tuesday at a hospital in Las Vegas. "Some said Medicare reform could never be done. For the sake of our seniors, we got something done."

But Democrats, who are overwhelmingly against the bill, vow the fight will go on. They claim the prescription plan doesn't do enough. And they're particularly worried that a future provision to allow competition into Medicare will force millions of seniors into HMOs.

"This is a bad bill. It's going to hurt seniors," said Democratic presidential candidate Howard Dean.

A handful of Democrats, either up for re-election, or in states where Republicans have made significant inroads did support the plan.

"I truly in my heart of hearts believe that seniors in my great state are going to be better served by this bill than they are under the present system," said Sen. Dianne Feinstein, D-Calif.

And some, it seemed, wanted it both ways, publicly denouncing the bill but skipping the vote, sidestepping the appearance of going against seniors while saying there was nothing they could do to stop it.

"This represents a special interest giveaway," said presidential candidate Sen. John Kerry, D-Mass., who missed the vote while out on the campaign trail.

The plan would cover 75 percent of prescription bills for most retirees up to $2,250 each year and almost all so-called "catastrophic" drug costs above $3,600. Seniors would have to pay a $250 deductible and an average annual premium of $420.

Retirees will have to wait until 2006 for their benefits, but the benefits for President Bush will be immediate. His campaign is aggressively targeting seniors, hoping to narrow the three-point gap that separated him from Al Gore among older voters in 2000.

While some called it a bipartisan vote, the tally fell largely along party lines. Forty-two Republicans, 11 Democrats and an independent backed the legislation. Nine conservative Republicans joined 35 Democrats in opposition.

The GOP-controlled House passed the bill near dawn on Saturday on a 220-215 vote, also split by party affiliation.

Democratic opponents complained that the bill was a giveaway to insurers and drug companies. Sen. Edward M. Kennedy, D-Mass., said it will dump seniors "in the cold arms of the HMOs."

Sen. Lincoln Chafee, R-R.I., was one of nine Republicans voting against the bill.

"We've got big tax cuts and an expensive war, and expanding an entitlement is gong to add to the deficits," said Chafee, adding that it was a difficult vote because he campaigned on the issue and his state has a large percentage of seniors.

Senate Democratic leader Tom Daschle of South Dakota said Republicans would pay a price in coming elections because "seniors by an overwhelming margin oppose this legislation."

When the legislation made it through the Senate for the first time, in June, Daschle and Kennedy were part of the overwhelming 76-21 vote for the bill. But in months of closed-door negotiations, majority Republicans and two Democratic senators forged a compromise bill that most Democrats believed was skewed to favor private insurers at the expense of traditional Medicare.

"It didn't have to be this way," Kennedy said.

At its heart, the Medicare legislation was designed as a grand bargain, 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.

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.

Arguments for the bill stressed that the pot of money set aside for the drug benefit would disappear in a time of budget deficits if lawmakers did not seize the opportunity now to end years of deadlock.

"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.