Senate passes Medicare bill

WASHINGTON – 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.

Drug coverage won’t begin until 2006, although seniors next year will be able to purchase a drug discount card that officials said could reduce their pharmacy bills by 15 to 25 percent.

Seniors “will finally have the prescription drug coverage they need and the choices they deserve,” Senate Majority Bill Frist of Tennessee said. “At the same time, it preserves traditional Medicare.”

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.”

While Frist and others 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.

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.”

Republicans relished their political triumph on an issue that Democrats have long exploited in political campaigns.

Bush sees signing the bill as fulfilling both his and many lawmakers’ campaign promises.

“Modernizing Medicare will make the system better and enable us to say to seniors we kept our promise,” Bush said after visiting Army troops Monday at Fort Carson, Colo.

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.

Under the legislation, seniors would be eligible beginning next year to purchase a Medicare-backed discount drug card at a cost estimated at $30 a year. The administration estimated the card would mean savings of between 15 percent and 25 percent off retail prices; critics argued those numbers were wildly inflated.

Beginning in 2006, the legislation would allow seniors to purchase coverage for their prescription drugs. GOP officials estimated the drug insurance premium would be $35 a month, with a $250 deductible. The coverage would pay 75 percent of costs after that until a recipient’s drug costs reached $2,250. After that, there would be no drug coverage until a recipient’s out-of-pocket expenses reached $3,600, or roughly $5,100 in overall prescription expenses. Above that level, insurance would pick up roughly 95 percent of costs.

The measure included subsidies for low-income seniors.

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.

Democratic critics retorted that a bad bill would be worse than no legislation at all, despite their long-standing support for drug coverage for seniors in Medicare.

The bill’s path to passage was cleared in the Senate on a pair of procedural votes, including a cliffhanger decided only when Sen. Trent Lott of Mississippi, the former Senate Republican leader, sided with the current GOP leaders. Lott voted against the overall bill.