The possibility of Medicare drug coverage moved forward Thursday as the Senate Finance Committee passed a compromise measure to provide seniors with a prescription drug benefit and two key leaders in the House announced their own version of the proposal.
In a 16-5 vote, the Finance Committee approved a $400 billion measure written by Chairman Charles Grassley (R-Iowa) and the ranking Democrat from Montana, Max Baucus. If passed by the Senate and negotiated in a compromise with the House, the bill would help pay for drugs for all 40 million Medicare beneficiaries.
The change would be the largest increase in Medicare benefits since the program was created in 1965.
"Both parties have promised for years to add prescription drugs to Medicare," said Grassley in a written statement. "Today we took a key step toward delivery."
Three Democrats and two Republicans voted against the bill, and some Democrats who voted for it said they hoped to make changes on the Senate floor. President Bush has indicated he supports the compromise, although it provides equal coverage through both private plans and fee-for-service Medicare. That approach veers from Bush's earlier plan to entice seniors into private plans with more comprehensive benefits.
Under the Senate proposal, seniors would pay an average monthly premium of about $35 and a deductible of $275. Medicare would then pay half of their drug costs up to $4,500, after which the government would not help with payments until seniors reach $5,800 in out-of-pocket costs. That is a change from the original plan for a gap in coverage between $3,450 and $3,700.
The current measure covers 90% of "catastrophic" costs, or high drug expenses exceeding $5,800. Beneficiaries with incomes below 160% of the federal poverty level, or about $16,000 per year, would receive a government subsidy.
The bill is scheduled to move to the full Senate on Monday.
Meanwhile, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) and Rep. Billy Tauzin (R-La.), chairman of the Energy and Commerce Committee, unveiled a Medicare reform plan with the same deductible and premium as the Senate proposal, but with a wider "doughnut," or gap, and more restrictive government subsidies for the poor.
Under the House plan, the government would pay for 80% of seniors' drug bills up to $2,000 but nothing more until beneficiaries pay $3,700 out of pocket, when 100% catastrophic coverage would begin. Premium and cost-sharing subsidies would kick in for individuals at 135% of the poverty level, compared to 160% in the Senate bill.
The House bill also provides for controversial means testing, with a higher sliding scale for the catastrophic drug coverage for seniors who earn $60,000 as individuals or $120,000 per couple.
Thomas said he expects the full Ways and Means Committee to mark up the bill as soon as June 17, and the Energy and Commerce Committee also is expected to vote on the bill next week.
Leaders in both the House and Senate have said they plan to have a floor vote on Medicare reform legislation before the July 4 congressional recess.