Human Needs Report Article

The Human Needs Report is the Coalition on Human Needs' newsletter on national policy issues affecting low-income and vulnerable populations. It is published every other week while Congress is in session.

Medicare Overhaul Continues In Congress (6/23/03)

Senate Begins Floor Debate While Two Committees Pass House GOP Proposal

Over the last two weeks, both the House and Senate have been working on overhauling the federal Medicare program, and it is likely both chambers will pass legislation next week before the upcoming July recess. The proposals in both chambers have garnered considerable criticism, but Congressional leaders are optimistic about passage of a drug benefit package this year. If differences between the House and Senate versions can be reconciled, it would represent the most significant expansion of Medicare since the program's inception in 1965.

SENATE BILL (S. 1)

Two weeks ago, on Thursday, June 5, Senators released plans for their prescription drug plan and Medicare overhaul. This was a breakthrough agreement in the Senate, which for years has not only failed to pass a prescription drug benefit, but also had great difficulty finding common ground from which to begin debate. A bipartisan proposal, the Prescription Drug and Medicare Improvement Act of 2003, was announced by Finance committee chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT).

Finance Committee Markup

The Finance committee marked up the legislation (S 1) in a day-long session the next week on Thursday, June 12. The committee worked through dozens of amendments during the 12 hour markup, including approving a substitute by Senators Grassley and Baucus that was designed to build support for the bill. The substitute incorporated requests from some members, including higher payments for hospitals in Puerto Rico requested by Senator Santorum (R-PA), a couple of amendments by Senator Blanche Lincoln (D-AR), and a request for a report on the program's unfunded obligations by Senator Nickles (R-OK).

The panel rejected a separate amendment by Senator Nickles that would prohibit states from providing health care through the State Children's Health Insurance Program to legal immigrant children and pregnant women. This benefit was added by Senator Bob Graham (D-FL) to restore public benefits to legal immigrants that were cut off after Congress passed the 1996 welfare reform law. Nickles has expressed concerns about the bill's increasing cost since it was first unveiled on June 5. The amendment was defeated 8 - 13.

At the end of the markup, the committee approved the bill 16 - 5, a much stronger endorsement than was originally expected. The five on the committee voting against the bill were Don Nickles (R-OK), Trent Lott (R-MS), John Rockefeller (D-WV), Bob Graham (D-FL), and John Kerry (D-MA). The two Republicans, Nickles and Lott, cited concerns that the proposed expansion of the program will dramatically increase mandatory spending. The Democrats who voted against it feared the legislation would harm Medicare's fee-for-service program and be a first step towards the privatization of the system.

Senate Floor Debate

The Senate began floor debate on S 1 this week on Wednesday, June 18. A huge number of amendments are being considered, and Senate Majority Leader Bill Frist (R-TN) expects the debate to run through most of next week.

Thus far, the Senate has completed a few amendments. The first amendment considered was introduced by Senator Debbie Stabenow (D-MI), and would have allowed seniors the choice of a government-run drug benefit plan no matter where they lived. S. 1 allows private plans to compete for services, but some Senators worry rural areas will not attract enough insurance companies to supply sufficient choice. The Stabenow amendment would require the government to offer a drug benefit to people with two or fewer private plans to choose from. The amendment was rejected 37 - 58. The Senate also rejected an amendment by Minority Leader Tom Daschle (D-SD) that would ensure an affordable benefit in all areas of the country by capping Medicare premiums. Daschle's amendment, which would require all premiums in private plans to be no more than ten percent more than the national average premium, failed 39 - 56.

In an attempt to decrease the cost of prescription drugs, the Senate passed 94 - 1 an amendment by Senators Gregg (R-NH) and Schumer (D-NY) that would limit the ability of brand-name drug companies to delay federal approval of competing generic drugs. Senator Schumer believes the generic drug proposal could save consumers $60 billion to $70 billion in the next decade and also could decrease Medicare costs by $18 billion to $20 billion.

With many amendments still waiting to be considered, Democrats plan to continue to attempt to expand the legislation's prescription drug coverage benefit. Senator Barbara Boxer (D-CA) is expected to introduce an amendment aimed at fixing one of the Democrats main objections to the bill, the so-called doughnut hole in coverage. Under the current plan, seniors would have 50 percent of their drug cost covered, after a $275 deductible, up to $4,500, but receive no assistance for drug costs between $4,500 and $5,813. Boxer's amendment would extend the 50 percent coverage of the participant's drug costs from $4,500 to $5,813. Further, Senator Bingaman plans to introduce an amendment that would eliminate the bill's assets test that would determine the amount of coverage for low income seniors. Other expected Democrat amendments include ones that would encourage employers not to drop retiree benefits, improve benefits in rural areas, allow drugs approved by the Food and Drug Administration to be imported from Canada, and allow seniors to stop paying their premiums while they are receiving no support in the coverage gap.

The Senate debate is expected to continue through next week, but Senate Majority Leader Bill Frist (R-TN) is confident a final vote will be scheduled before the July 4 recess, perhaps on June 27, the last day before recess.

HOUSE BILL (H.R. 2473)

GOP Leaders in the House released their version of the Medicare drug legislation on Thursday, June 12, the same day as the Senate Finance committee markup. The legislation was released after weeks of negotiations between the Energy and Commerce committee and Ways and Means, which share jurisdiction of the program. The House plan, while similar in some respects to the Senate, has dramatic differences that many critics say could undermine the entire Medicare program if enacted. Differences between the two plans include a much large coverage gap (beginning at $2,000 rather than $4,500 in the Senate), a means-testing provision that would negatively impact higher-income seniors, a lack of a backup government run drug plan to cover seniors when there are too few private plans from which to choose, and perhaps most contentiously, a "competitive bidding" provision that would force Medicare to begin competing with private health plans in 2010.

Ways and Mean Markup

The Ways and Means committee marked up the bill in one day, on Tuesday, June 17. During the markup, Democrats offered a number of amendments, many of which were defeated on mostly party-line votes. Most notably, Representative Cardin (D-MD) offered an amendment that was defeated 15 - 23 to provide all Medicare participants with the option of choosing a drug benefit through the Medicare program. Representative Doggett (D-TX) introduced an amendment that would encourage drug manufacturers to offer drugs for prices similar to those they charge in Canada. This amendment lost 13 - 22. Representative McDermott's (D-WA) amendment, which would have deleted the competitive bidding language from the bill, lost 14 - 23. And finally, a substitute bill was offered as an amendment by Representative Stark (D-CA) that would have doubled the size of the legislation to offer more comprehensive coverage through the Medicare program. It was defeated 15 - 24. The committee approved the overall bill by a vote of 25 - 15, with only one Democrat, Ralph Hall (D-TX), voting for it.

Energy and Commerce Markup

The Energy and Commerce committee held a three-day markup from Tuesday, June 17 through Thursday June 19. The markup was filled with partisan discord and a large degree of animosity between Democrats and Republicans. Democrats and a few Republicans offered amendments to improve the bill throughout the three days, although few were accepted by the committee.

Democrats attempted to strike language requiring Medicare to compete with private health insurance plans with an amendment from Sherrod Brown (D-OH). Chairman Billy Tauzin (R-LA) twice threatened to take down Brown's statements, a rare punishment in committee work, when Brown linked the Republican vision for Medicare with campaign contributions from the drug industry. After a lengthy debate, Brown's amendment was rejected 25 - 29. Democrats are concerned the competition provision in the House bill will create two levels of health care - the private plans offering more generous benefits, and the traditional Medicare plans covering the most poor and most sick participants.

Hoping to correct the concerns over possible large increases in premiums in rural areas, Ted Strickland (D-OH) offered an amendment that would have set initial premiums for all participating prescription drug plans at $35 per month in 2006, indexed each year for inflation. It was defeated, 22 - 28.

Another amendment, offered by Lois Capps (D-CA) would improve benefits in rural areas by creating a backup plan that required the Department of Health and Human Services to offer a nationwide prescription drug plan. Capps argued that the GOP-drafted bill provides no guarantee that seniors in rural areas would be able to obtain coverage. The amendment was rejected 23 - 30.

A proposal by Gene Green, (D-TX) would have counted employer and Medigap spending toward the cost threshold at which catastrophic coverage begins, thereby closing the coverage gap more quickly. The panel rejected the amendment, 24 - 30. Another amendment by Green that was similar in its attempt to close the coverage gap also failed.

An amendment by Henry Waxman (D-CA) would have eliminated senior citizens' assets from the bill's means test for catastrophic protection. The panel defeated the amendment, 22 - 30. Another amendment to eliminate means testing from the bill was offered by Jan Schakowsky (D-IL), and was rejected 24 - 29.

Finally, the committee defeated a substitute bill offered by Ranking Member John Dingell (D-MI). The committee voted 25 - 27 to defeat the amendment that would substitute a more generous proposal for the Republican bill. Dingell's substitute called for a $25 monthly premium and $100 yearly deductible. After the deductible had been reached, the plan would cover 80 percent of all drug expenses up to $2,000. The federal government would cover all drug expenditures above that level.

OUTLOOK FOR PASSAGE

With support from Senator Edward Kennedy (D-MA), Minority Leader Tom Daschle (D-SD), and other Democrats for the Senate Finance Committee plan, a prescription drug bill is expected to pass the Senate. House passage is also virtually assured. Because some advocates of a prescription drug benefit have opposed the limited coverage in the Senate's approach, a move towards the less generous House version in conference could unravel the progress towards final passage. Senator Kennedy, for example, opposes the House bill.

Democrats and advocacy groups have expressed the most concern over three issues that are worse in the House bill: the gap in coverage begins at a much lower dollar amount (no assistance is provided for drug expenses from $2,000 to $4,900; the Senate coverage gap is from $4,500 to $5,813); the lack of back-up coverage to be offered by Medicare when private plans are not available in certain areas of the country; and the prospect of forcing the Medicare program to compete with private health insurance companies that may offer less comprehensive but cheaper coverage.

The last issue has perhaps been the most daunting aspect to overcome because of its implications for the long term stability of the Medicare program. Advocates worry that forcing Medicare to compete will dramatically increase premiums for seniors and people with disabilities who want or need to stay in traditional Medicare fee-for-service. This is because private plans usually are more attractive to the healthiest individuals, thereby leaving the most sick in the Medicare plans. Senate Minority Leader Tom Daschle has commented such a provision would be just another way to privatize the system and would be unacceptable to Senate Democrats.

Senate conservatives, specifically John Kyl (R-AZ) and Trent Lott (R-MS) have recently increased their criticism of the bill and demanded more incentives be added for private health care plans. Further, twenty-seven Republican Senators sent a letter to President Bush stating that a final Medicare bill should be more focused on helping low-income seniors and Medicare beneficiaries with high drug costs instead of making prescription drug coverage available to all of Medicare's more than 40 million beneficiaries. The letter cited concerns about the possible huge future costs of an all-inclusive drug benefit. These developments imply there is still much to resolve and perhaps many changes before the bills are passed.

The White House has not commented on which plan it supports, but has given encouraging words to both the House and Senate versions. President Bush has urged Congress to act quickly to enact a drug benefit in speeches around the country. Floor debate on the House bill is scheduled to begin this week, and debate will continue in the Senate. Votes in both chambers are expected towards the end of this week.