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Senate nears passage of new Medicare drug benefit

GOP gives up on energy bill

WASHINGTON -- The Senate cleared the way yesterday for final passage of sweeping legislation that would for the first time provide a prescription drug benefit to seniors on Medicare and allow private health plans to compete directly with the federal program for elderly patients.

"This is a momentous and historic day," said Senate majority leader Bill Frist, Republican of Tennessee, before the $400 billion bill survived two Democrat-led efforts to kill it through parliamentary means. The expected passage as soon as today would be a big win for President Bush, who pledged in his 2000 campaign to provide prescription drug benefits for elderly outpatients.

But another bill highly desired by the White House and shepherded by Vice President Dick Cheney was declared dead for the year.

Last night, the Senate dropped its effort to pass the troubled energy package, after repeated attempts to find two additional votes to end debate and push the bill through Congress.

Frist said there was not enough time before the Senate was to recess for the holiday to hammer out a compromise. A sticking point had been a provision to substantially eliminate lawsuits against producers of MTBE, a gasoline additive that has contaminated ground water.

The White House said it would push for the legislation in January.

The Medicare bill had Republicans in the odd position of battling to approve the biggest expansion of the Great Society health program in history, creating a new entitlement for the 40 million seniors and disabled people enrolled in the program. It will face a simple majority vote for passage as soon as today. Senator Edward M. Kennedy, one of the chief architects of the original Senate legislation, fought mightily to filibuster his own bill, complaining that it had been rewritten in a way that would threaten the future of Medicare.

"We all know what's going on," the Massachusetts Democrat bellowed on the Senate floor in an attempt to stop the bill.

"It's the objective of our good friends on the other side," he said, to usher in "the beginning of the dismantling of the Medicare system."

"Let's go back to the drawing board," Kennedy urged. "This is a matter of life or death for many of our senior citizens."

A majority of Senate Democrats, joined by a few deficit-wary Republicans, tried twice to hold up the bill, with foes clinging to hope that the American public would pressure lawmakers to kill the legislation once details of the legislation were fully understood. While the AARP, the influential seniors lobby, has endorsed the bill, a University of Pennsylvania poll released yesterday suggested that Americans were divided on the question and that only 33 percent of seniors polled wanted it approved.

Opponents came closest to stopping the bill when they challenged its spending levels as violating budget rules. Republican lawmakers prevailed, 61-39, one vote more than the three-fifths majority needed to waive the rules.

Senator Trent Lott, a Mississippi Republican normally opposed to expanding government programs, held out for nearly 40 minutes while his colleagues convinced him to vote with them.

"I think Republicans probably made a mistake, in that we went with a universal program," instead of a benefit targeted to lower-income seniors, said Senator Jeff Sessions, an Alabama Republican who ultimately supported the bill. "Everybody had come to the conclusion that we needed to do this."

The legislation drew complaints for what it included and what it omitted. Some lawmakers were distressed that the final bill would not legalize buying prescription drugs from Canada or other industrialized countries. Others felt the coverage was inadequate, and a pack of determined conservatives complained that the bill did not go far enough in allowing competition from private companies.

But Congress was under heavy pressure to approve what many called an imperfect bill. Candidates in both parties have been promising for years to do something about prescription drug costs for seniors, and the looming $500 billion deficit would make it difficult to pass such a massive program next year.

Coverage would not begin until 2006, except for a drug discount card that seniors would receive next year. Beginning in 2006, 75 percent of the cost of prescription medicines, up to $2,250, would be paid, after a $250 deductible. No additional coverage would be available until drug costs exceed $5,100, which is defined as the catastrophic level.

Seniors would still have to continue paying monthly premiums, estimated to average $35, even while they were not eligible for any benefits at all in the so-called doughnut hole in coverage. But the share of prescription costs paid by most seniors who reach that catastrophic level would go down to 5 percent and even lower for poor beneficiaries.

The measure also would greatly expand the role of private insurance companies in providing health care for seniors. Citizens would be eligible to open tax-free accounts for health care similar to retirement accounts.

For the first time, private insurance plans would be allowed in select areas to compete for patients with Medicare. Seniors' premiums would be based in part on what private plans offer, and proponents argue that the setup would cause a drop in prices.

But Kennedy and other critics say the initiatives would slowly erode Medicare and raise premiums for seniors who choose to stay in Medicare. Private insurance companies could cherry pick clients, writing cheaper plans designed for younger and healthier patients, and traditional Medicare patients would end up paying more, Kennedy argued.

Senator Orrin G. Hatch, Republican of Utah, accused Kennedy of "trying to scare senior citizens."

"I guess he wants to spend another 15 years trying to reform Medicare or improve Medicare or provide a prescription drug benefit," Hatch said.

Many lawmakers also criticized what they called inadequate provisions to control Medicare's costs. Many Democrats, for instance, argued that Medicare officials should be given the authority to negotiate directly with drug companies to get lower prices. The legislation specifically prohibits the federal agency that oversees Medicare from doing so.

Thomas Scully, administrator of the Centers for Medicare and Medicaid Services, said local pharmaceutical buyers should negotiate group discounts, instead of Medicare. Because Medicare patients account for 50 percent of prescription drug spending, "we wouldn't be negotiating," he said. "We'd be price-fixing."

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