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Child tax credit, Medicare bill gain

THE BALTIMORE SUN

WASHINGTON - Republicans and Democrats united yesterday to push through the Senate a $10 billion bill that would send tax-credit checks of up to $400 per child to 6.5 million low-income families who earn too little to owe income tax.

The measure passed overwhelmingly, 94-2, after a week of pressure from Democrats, resistance from Republicans and, finally, frenzied negotiations.

Democrats had mounted an intense campaign to force Republicans to extend the child tax credit to lower-income families who would not otherwise be eligible under the new tax-cut law. Republican negotiators had dropped a provision that would have included those families.

At the same time, in a major step forward in what promises to be one of the most contentious issues on Capitol Hill this year, the parties have agreed on a measure that would add a prescription drug benefit to Medicare in 2006.

But both initiatives face an uncertain future. Sharp differences - between the two parties and within them - could fray the alliances reached this week and prevent the measures from becoming law.

In the House, Republican leaders are opposed to the child tax-credit measure, which would expand eligibility so that families who earn between $10,500 and $26,625 - including 103,000 families in Maryland - could receive the credit.

They are set to take up the measure next week. But the Republicans will likely attach a provision to make permanent the $400 increase in the child credit provided by the new $350 billion tax cut, said John Feehery, a spokesman for House Speaker Dennis Hastert of Illinois.

The Senate-passed measure also lifted the income limit for married couples receiving the child credit, from $110,000 to $150,000. Its proponents urged the House to quickly approve it.

"We must not allow partisan differences and bickering [to] stymie legislation which will help our most vulnerable populations," said Sen. Olympia J. Snowe, a Maine Republican.

Two senators - James M. Inhofe and Don Nickles, both Oklahoma Republicans - opposed the bill. But the remaining Republicans voted for it, some of them grudgingly, loath to send tax benefits to those who pay no income taxes but under political pressure to do so. Sen. Trent Lott of Mississippi made a gesture indicating his aversion to the bill as he raised his hand to vote "aye."

Yesterday's agreement on Medicare kicked off what is likely to be a busy month of action on the issue, which lawmakers say they hope to complete by the end of the month. Congress has set aside $400 billion over the next decade for reform of Medicare and the addition of prescription drug coverage.

The bipartisan proposal, the subject of a Senate Finance Committee hearing today, would add a prescription drug benefit - a leading priority of senior citizens - to the 38-year-old Medicare program. It would also create a "Medicare Advantage" program that would rely on private health plans and offer the same drug coverage option.

Much of the measure parallels a plan President Bush outlined this year. But it differs in one key respect: The bill would extend uniform prescription drug coverage to seniors, whether or not they joined the new, privately run Medicare program.

By contrast, as an incentive to join what he called "enhanced Medicare," Bush proposed that seniors in the private health plans be given access to a more generous prescription drug benefit than those who remain in the traditional government-run Medicare program.

Still, the White House released a statement yesterday that pronounced the president "encouraged" by the agreement.

"We have a real opportunity to get something done this year, while providing America's seniors with more choices and better benefits so they can choose the care that best meets their individual health needs," the statement said.

The measure is the product of negotiations among a coalition of centrists led by Sen. Charles E. Grassley, the Iowa Republican who chairs the Finance Committee, and Sen. Max Baucus of Montana, the committee's senior Democrat.

"Our agreement gets one important step closer to making drug coverage a permanent part of Medicare," Grassley said.

But the measure is drawing complaints from both conservative Republicans and liberal Democrats.

Conservatives wanted to follow Bush's lead, effectively forcing seniors to enroll in a reformed Medicare program to receive full prescription coverage.

Many Democrats, including Minority Leader Tom Daschle of South Dakota, said that proposal is not generous enough. They argue that it leaves seniors to pay at least some drug costs with no help and fails to guarantee a set premium and benefits.

The measure "falls significantly short" of Democrats' objective that any Medicare prescription drug benefit be "affordable, reliable and comprehensive," Daschle said in a statement.

Congress has tried since 1998 to add a prescription drug benefit to Medicare, only to bog down in partisan disagreement and intraparty splits.

But in a sign that the measure may have the sort of bipartisan momentum that past proposals lacked, one leading Democrat, Sen. Edward M. Kennedy of Massachusetts, called it "a major breakthrough in our effort to give senior citizens the prescription drug coverage under Medicare they need and deserve."

The Senate Finance Committee is poised to approve the measure next week. Two House committees are expected to follow suit in two weeks, when the full Senate is scheduled to take up the measure.

Under the measure, Medicare would begin offering drug coverage to seniors in 2006. It would give them a discount card in the meantime that lawmakers say would save them 10 percent to 25 percent on prescriptions.

In 2006, seniors could either stay in the traditional Medicare program and receive drug coverage or join Medicare Advantage, which would rely on private health plans, mostly "preferred provider organizations." These plans would offer both medical care and prescription drugs.

Either way, seniors would pay a $35 monthly premium and have a deductible of $275, after which 50 percent of their prescription costs would be covered, up to $3,450. Beyond that figure, seniors would have to pay for all their medicines until their costs - excluding any aid from employer plans or supplemental insurance - reached a "catastrophic" level of about $5,300. Above that, 90 percent of their drug costs would be covered.

Democrats and some seniors groups decry the gap in coverage as a "doughnut hole" or a "sickness penalty" that offers insurance that ends just as seniors really start to need it.

But proponents said it was all Congress could afford.

"It's not total coverage," Baucus said. "This is a first step. In future years, we'll work on it."

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