Medicare Outline May Be in Reach by Friday

October 23, 2003

By Joanne Kenen, 10/22/2003

WASHINGTON (Reuters) - Pushed by congressional leaders to bring weeks of talks to a close, negotiators hammering out a final Medicare bill said they aimed to have at least the main pieces of an agreement in place by Friday.

"There's a real desire that at Friday at 9 a.m. we're going to have a product that's pretty much done," Sen. Grassley, an Iowa Republican and chairman of the Senate Finance Committee, said Wednesday.

Negotiators are trying to meld bills approved by the House and Senate last June. Both bills add a drug benefit to the federal health plan for the elderly and both expand the role of private managed care in Medicare, but not to the same extent.

"We now have on paper things that we've been talking about for weeks," Grassley said, declining to discuss details.

Aides to House Speaker Dennis Hastert, an Illinois Republican, and Senate Majority Leader Bill Frist, a Tennessee Republican, said they did not expect all the details completed by Friday but wanted the bill in firm enough shape that they can start briefing other lawmakers and do the final budget analysis. The goal is final approval by the House and Senate in early to mid-November.

Participants in the talks and health analysts tracking the bill have described tentative agreements on several key components. They include:

-- A drug benefit in which the government would pay 75 percent of the costs and the beneficiary 25 percent for the first $2,200 a year. After that people would experience a coverage gap sometimes called a "donut hole" where they have to pay their own prescription bills until they hit a "catastrophic" level, probably around $5,000 a year.

-- Subsidies for poor people up to 150 percent of the poverty level. They would also have that "donut hole" filled.

-- A fallback provision, demanded by the Senate, where traditional Medicare would offer the drug coverage if people could not choose from two private drug insurance policies.

-- The poorest people, eligible for both Medicare as well as the state-federal Medicaid health programs for the poor, would get their drugs through Medicare not Medicaid.

-- Boosts in payments to health care providers, particularly in rural areas.

-- Requiring wealthier people to pay more for their "Medicare Part B" premiums that cover doctors visits. The exact income levels have not been determined but some lawmakers said subsidies could be phased out for people earning more than $100,000 a year.

-- A payment system to entice more private managed care networks to enter Medicare. The system would reward them as their market share increased.

-- Subsidies to encourage businesses to continue offering retiree drug coverage.

-- Some expansion of tax-preferred health savings accounts, though far less than the House originally envisioned.

Perhaps the stickiest problem remains unresolved. That is a House provision that would require traditional Medicare to compete against private plans starting in the year 2010. It is anathema to most Democrats but a top priority for conservative Republicans, particularly in the House.

However, those seeking a compromise said they hoped to persuade conservatives that a pilot project, plus the private plan payment system, constituted adequate reform.

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Medicare Outline May Be in Reach by Friday

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