Congress last week sent President Clinton tax-cut legislation that would allow Medicare beneficiaries to deduct from their taxable incomes the costs of buying private insurance to cover prescription drugs.
The provision in the broad tax bill is a prelude to a battle between Clinton and congressional Republicans over comprehensive Medicare reform.
Clinton's Medicare reform package would provide prescription drug coverage for seniors by expanding current Medicare benefits.
Information about Clinton's reform package has been public for months, but the package has not been introduced as legislation.
In response to Clinton's proposal, the GOP offered the prescription drug tax cut, which would take effect only if a comprehensive Medicare package were enacted. The package would have to include a subsidy for low-income beneficiaries, require private Medicare supplemental plans to cover drugs and offer a drugs-only plan, and require fee-for-service Medicare to participate in a competitive pricing scheme including private healthcare plans.
The tax-cut legislation also aims to expand health insurance coverage for lower-wage workers who pay for at least half of their health insurance premiums. It would allow them to deduct their share of the premiums from their taxable incomes.
Clinton has promised to veto the legislation, which would reduce taxes by $792 billion over 10 years.
Meanwhile, Rep. Michael Bilirakis (R-Fla.), chairman of the House Commerce Committee health subcommittee, proposed another option. Under his plan, the federal government would help states subsidize prescription drug purchases for low-income Medicare beneficiaries. It would also include a "stop loss" feature to help seniors who have high drug costs. Once the costs reached a threshold, the federal government would pay the rest.
A spokesman said Bilirakis' bill will be introduced in September.
Despite scheduling a vote last week, House Republicans abandoned their efforts to pass managed-care reforms before Congress' August recess. Talks among subcommittee chairmen, including Bilirakis, failed to produce compromise legislation.
The most contentious issue has been whether to allow health plan enrollees to sue because of injuries resulting from the denial of covered benefits or whether to rely solely on an evaluation of coverage decisions by outside reviewers.
In response to the slow progress from Republican leadership, dissident GOP Reps. Greg Ganske of Iowa, a surgeon, and Charlie Norwood of Georgia, a dentist, last week teamed up with Rep. John Dingell of Michigan, senior Democrat on the Commerce Committee, to release a consensus managed-care bill.
The bill would allow enrollees to sue for injuries caused by coverage denials. But plans would be shielded from punitive damages if they followed the rules of an external review mechanism.
Meanwhile, Bilirakis also hinted that legislation to roll back Medicare spending policies from the Balanced Budget Act of 1997 would significantly revise HCFA's "risk adjuster" for Medicare+Choice plans.
Bilirakis said Congress never intended for the risk adjuster, which pays plans more for enrolling sicker beneficiaries, to cut total Medicare+Choice payments by $11 billion over five years.
But HCFA said the reduction is necessary because Medicare is still overpaying managed-care plans.