WASHINGTON - Congress passed early this morning a historic overhaul of Medicare that would add prescription drug benefits and take the first steps toward bringing private competition into the health care program for the elderly and disabled. The Senate overwhelmingly passed its version shortly before the House approved its bill by a much closer, partisan vote.
Republicans savored a victory on the 10-year, $400 billion Medicare legislation, which the passed by a vote of 76-21 in the Senate and 216-215 in the House. Those votes marked the first time, after five years of trying, that lawmakers in both parties and both chambers have managed to reach a deal to provide drug coverage for seniors.
"It's a landmark day," declared House Speaker Dennis Hastert, an Illinois Republican.
The measures head next to a conference committee in which House and Senate negotiators will iron out the differences between their versions and, most believe, produce a final bill that President Bush can sign this year.
Bush, who lobbied forcefully for the measure, has signaled that he will accept a compromise plan, even though some conservatives say it would saddle the financially burdened Medicare program with a costly new entitlement without injecting enough private competition to offset it.
Vice President Dick Cheney worked in his Capitol Hill office yesterday, meeting with wavering House Republicans to try to persuade them to put aside their concerns and back the measure.
Many Democrats, especially in the House, decried the action last night as the beginning of the end for the 38-year-old Medicare program. They said the changes would put seniors at the mercy of profit-driven private plans that could charge exorbitant fees for drugs and services.
In the Senate, 35 Democrats, including Sen. Barbara A. Mikulski of Maryland, joined 40 Republicans and one Independent in supporting the measure, but some said they were doing so grudgingly. Ten Republicans and 11 Democrats, including Sen. Paul S. Sarbanes of Maryland, voted "no."
Senate Minority Leader Tom Daschle, a South Dakota Democrat who supported the measure, called it "only a tentative and shaky first step."
"Seniors need real prescription drug coverage, but the best we are offering is an on-again, off-again discount plan that provides at least as much confusion as it does coverage."
But Majority Leader Bill Frist, a Tennessee Republican and former surgeon, called the measure a major accomplishment.
"America is one step closer to being a more caring society for millions of seniors struggling with high prescription drug costs and outdated medical care," Frist said after the vote.
Bush has embraced the core of both the House and Senate plans, which would produce the most far-reaching expansion of Medicare since its creation in 1965 as a Great Society-era social program.
"This is the greatest action in a generation to mend the broken promise of Medicare," said Sen. Edward M. Kennedy of Massachusetts, whose support, coming from a liberal Democrat, gave crucial momentum to the White House-backed plan.
The measures would provide drug coverage to seniors beginning in 2006. Medicare beneficiaries could either stay in the government-run program or join private "preferred-provider organizations," or PPOs, that offer integrated coverage for medicine and health services.
Both measures offer a modest drug benefit to seniors, with coverage that kicks in after they pay a monthly premium and meet a deductible. Coverage would turn off as their prescription costs rise and ultimately return as the expenses reach a "catastrophic" level. The on-again-off-again nature of the benefit, which critics have denounced, stems from budget limits set by Bush and Republican leaders.
Under the House plan, seniors would pay a monthly premium of about $35 and have a $250 deductible, then receive a subsidy for 80 percent of their drug costs between $251 and $2,000. They would then pay 100 percent until their total drug expenditures reach $4,900. After that, they would pay 10 percent of their drug costs.
The Senate measure also sets a monthly premium of about $35, with a $275 deductible. It would cover 50 percent of drug costs between $276 and $4,500. Beneficiaries would have to pay for all of their medicines until their total costs reached $5,800, after which their share would fall to 10 percent.
In a key vote, the Senate adopted, 71-26, a proposal to include $12 billion to test the two parties' competing ideas for how Medicare should operate in the future. Republicans who wanted private health plans to be able to bid competitively to cover senior citizens secured $6 billion to test such a system for five years, starting in 2009.
Democrats who wanted to keep the government-run Medicare system as it is, while adding new benefits such as preventive and chronic care, won $6 billion to test that approach over the same period.
Senate Republicans succeeded in fending off Democratic amendments that would have made the drug benefit more generous or poured more money into Medicare. An 11th-hour attempt by Sens. Dianne Feinstein, a California Democrat, and Don Nickles, an Oklahoma Republican, to attach a provision that would have required wealthier seniors to pay a larger share of their Medicare premiums delayed and nearly derailed the measure. But with Kennedy dead set against it, leaders dropped the proposal.
At the same time, House leaders scrambled to round up the votes for passage, over the fervent opposition of Democrats, of their version of the bill. It reflects the more conservative bent and Republicans' larger margin of control in the House.
Before turning to the Medicare bill, House Republicans moved to placate conservatives by passing, 239-191, a $174 billion measure to allow some people to use money in tax-advantaged "health savings accounts" to pay for prescription medicines and health insurance.
The House Medicare bill would provide a similar prescription drug benefit and PPO option for senior citizens, starting in 2006. But it goes much further than the Senate measure to inject what Republicans say will be cost-saving competition into Medicare starting in 2010. Private insurers would begin that year to compete with each other and with Medicare itself to cover senior citizens.
"This is an exciting day for every senior in America, because this is the day we modernize Medicare," said Rep. Billy Tauzin, the Louisiana Republican who chairs the Energy and Commerce Committee, which helped draft the bill. Tauzin said the change would improve Medicare by giving beneficiaries "different stores to shop in - not just the government store."
'A Trojan horse'
House Democrats, who unsuccessfully offered a $950 billion alternative that would have added prescription drug benefits to Medicare without any private option, painted a much darker picture of the Republican-written bill.
They say it offers a stingy drug benefit and would ultimately wipe out the Medicare system by turning seniors loose in 2010 into a marketplace where private health plans would lure them in and then jack up prices, ultimately abandoning them.
"The House Republican plan is an unflinching betrayal of America's seniors," said Rep. Steny H. Hoyer of Southern Maryland, the Democratic whip, who said the bill would "turn Medicare into maybe-care."
"It is a Trojan horse, this promise of prescription drug coverage, which masks the destruction of Medicare," Hoyer said.
Some conservatives remained opposed to the measure, which they said does too little to ensure that private health insurers have the chance to compete to cover seniors.
"These reforms don't go far enough," Rep. Lee Terry, a Nebraska Republican, said early in the day, before he was to meet with Cheney. "We've given up our principles."