Drug Coverage Issue Stands in the Way of Medicare Agreement
Bloomberg News
February 22, 1999, 3:39 p.m. ET
Drug Coverage Issue Stands in the Way of Medicare Agreement
Washington, Feb. 22 (Bloomberg) -- Prescription drug
coverage for seniors may become a stumbling block preventing a
special commission from reaching agreement on a blueprint for the
future of Medicare.
Republicans on the panel worry that requiring Medicare to
cover prescription drugs would add billions of dollars in costs
to the financially troubled health insurance program for the
elderly. The Democratic appointees, however, say a prescription
drug benefit must be added to Medicare's basic benefits package.
''I can't see myself going into the 21st century without
Medicare having prescription drugs,'' said Stuart Altman, a
commissioner appointed by President Bill Clinton.
The commission meets Wednesday, trying to meet a March 1
deadline for making recommendations to Clinton and Congress on
changes to prepare the program for an influx of retiring baby
boomers after 2010.
The commission chairman, Democratic Senator John Breaux of
Louisiana, is seeking a compromise on prescription drugs that
will enable him to get the 11 votes needed to forward official
recommendations to the Republican-controlled Congress.
The drug industry opposes a requirement that Medicare cover
prescription drugs, arguing that it will lead to price controls
that would squeeze their profits. Instead, the drug makers
support Breaux's proposal to open Medicare up to competition
among health insurers, arguing that will lead to an expansion of
senior citizen drug benefits without writing a coverage
requirement into law.
Micromanaging
Breaux opposes making prescription drugs a part of the basic
benefit package in the traditional Medicare fee-for-service
program, arguing it would give Congress another benefit to fight
over.
''We'd be micromanaging yet another feature of the health-
care system,'' Breaux said.
He also believes that adding prescription drugs to the basic
benefit package would cost him too many commission votes.
Republicans on the commission, such as Texas Senator Phil Gramm,
worry the benefit would worsen the Medicare financial problems
the commission is supposed to be trying to fix.
Gramm ''has from the outset been skeptical that adding a
very expensive new benefit to a program that's already drowning
will do anything but shove its head under water,'' said Gramm
spokesman Larry Neal.
Breaux is looking at a compromise that would require
insurers serving Medicare beneficiaries, including those
providing so-called Medigap supplemental coverage, to make
prescription drugs benefits available in every policy.
''We're going require Medigap to offer drugs in all Medigap
plans,'' Breaux said.
Counting Votes
Breaux is counting on support from the panel's eight
Republican appointees and from Democratic Senator Robert Kerrey
of Nebraska. He needs to hold onto their votes while also winning
another Democrat. Altman and commissioner Laura D'Andrea Tyson, a
former White House economist, have shown the most interest in
supporting the Breaux plan.
Yet they both want prescription drugs as part of a detailed
guaranteed benefits package in Breaux's proposal. That way health
plans would compete on price and quality, Tyson said.
Medicare spending is expected to explode once 77 million
baby boomers begin retiring after 2010. The commission, charged
with preparing the program for that burden, says the program will
grow to 28 percent of the federal budget in 2030 from 12 percent
now.
Competition
Breaux's Medicare proposal would invite health insurers to
compete for the business of senior citizens. HMOs and other
insurers would negotiate annual premiums with the government.
Senior citizens would choose from a menu of health plans, and the
government would pay part of the premium. Seniors choosing higher-
cost plans would contribute more toward their cost of coverage.
Currently, 85 percent of Medicare beneficiaries are enrolled
in traditional fee-for-service. The remainder are enrolled in
HMOs, which have attracted senior citizens by offering drug
benefits. Medicare payments to HMOs are based on a non-negotiable
reimbursement formula that the health plans complain it is too
low in many parts of the country.
Breaux, who sits on the Senate Finance Committee that
handles Medicare issues, said he believes he could get enough
votes on that panel to move his Medicare ideas forward regardless
of whether he wins over 11 commissioners.
''Even if I don't get an (11-vote) majority, that doesn't
mean I won't have a majority in Congress,'' Breaux told reporters
on Capitol Hill today.
--Paul Heldman in Washington (202) 624-1842 / mfr
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