CHN: Medicare Prescription Drug Benefit Fails in Senate

Chamber Approves Drug Pricing and Medicaid Measures

After two weeks of debate and votes on four separate bills, the Senate failed to pass legislation creating a prescription drug benefit for Medicare recipients. Currently, Medicare does not cover prescription drugs that patients take outside hospitals. According to a recent survey conducted by the Kaiser Family Foundation and others, nearly a quarter of seniors said that they skipped doses of prescription drugs or did not buy the medications they needed in 2001 because costs were too high.

Soaring prescription costs are sure to be a theme in the fall elections, with Democrats and Republicans blaming each other for failing to deliver a drug benefit plan to the country’s seniors. At the heart of the disagreement between the parties is how the drug benefit would be administered to program beneficiaries. Among Democrats, the consensus is that the benefit should be delivered through the existing government-run Medicare program, while most Republicans favor offering prescription drug coverage through private insurers.

Over the course of the two-week debate, none of the four bills offered garnered the 60 votes needed to overcome procedural hurdles related to the budget. Senator Bob Graham (D-FL) sponsored a comprehensive, $594 billion 10-year plan that was defeated by a 52 to 47 margin. A $370 billion, 10-year “tripartisan” alternative forwarded by Senators James Jeffords (I-VT), John Breaux (D-LA) and Charles Grassley (R-IA) failed, 48-51. And a limited $170 billion plan sponsored by Senators Chuck Hagel (R-NE) and John Ensign (R-NV) was defeated on a 51 to 48 vote.

Finally, on July 31, the Senate rejected a $400 billion, 10-year proposal forwarded by Bob Graham (D-FL) and Gordon Smith (R-OR) to provide prescription drug coverage to the nation’s poorest Medicare recipients and those with annual drug costs exceeding $3,300. In search of a compromise, many Democrats were willing to vote in favor of the bill even though it would not have provided coverage to all Medicare beneficiaries as most in the party desire. Like its predecessors, this bill failed to capture the 60 votes needed to overcome budget challenges – it was defeated, 49-50.

The Senate did approve the underlying legislation (S 812) that was the vehicle for the prescription drug debate. The chamber voted 78 to 21 to change patent laws to make it more difficult for pharmaceutical companies that make brand-name drugs to obstruct competition from those that manufacture cheaper generic versions. The bill also would allow the country to reimport US-made drugs from Canada, where they are sold much more cheaply.

In addition, an amendment to the underlying bill would provide $9 billion to the states in Medicaid and social service funding. Most states are suffering from severe budget deficits due, in part, to falling revenues and rising health care costs. The amendment, approved by a 75 to 24 margin, would direct $6 billion to state Medicaid programs and $3 billion in flexible grants for other low-income programs. Nearly 40 states stand to benefit from the measure. The House, however, is not expected to take up similar legislation.

For its part, the House passed a Medicare prescription drug bill (HR 4954) in June that would provide limited drug coverage to seniors through private insurers. Under the bill, approved by a 221 to 208 vote, Medicare patients would pay an annual $250 deductible, and a monthly premium of about $35. The plan would require patients to pay 20 percent of the cost of prescriptions up to a $1,000 limit, and 50 percent of the next $1,000. Patients would pay all drug costs between $2,001 and $3,800; insurance plans would pick up the tab for expenses beyond that. The nation’s largest seniors group, the AARP, has criticized the GOP-backed bill for leaving significant gaps in coverage.

Some Senators have vowed to press forward with the debate on a Medicare prescription drug benefit when Congress returns from its August recess. The prospects for reaching agreement, however, appear slim at present.