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A Senior Drug Benefit: One Tough Pill

By Howard Gleckman It must be an election year. Over the next month, Washington will be bursting with plans to provide seniors with a generous new prescription-drug benefit. By the end of May, the Republican-controlled House hopes to roll out a $350 billion, 10-year plan that will both provide a modest benefit and restructure the basic Medicare program. The GOP strategy is to pass the measure by the Fourth of July.

By contrast, Senate Democrats are preparing several more-generous versions -- each of which could cost hundreds of billions more. And Senate centrists may offer a middle-ground plan that would resemble the House GOP bill in size but be less ambitious in restructuring the overall Medicare program. Left in the dust: a $180 billion plan that President Bush has proposed.

The chances that any of these grand schemes will be signed into law this year are slim. Still, public backing for a drug benefit runs high, and lawmakers may choose to approve a largely symbolic -- and far more modest -- program, if only to relieve the political pressure. Some possibilities: coverage for outpatient cancer drugs or a measure that would allow pharmacies to import lower-cost drugs from Canada.

BIG QUESTIONS. At this point, lawmakers not only disagree about the size of the benefit but they're also far from consensus on its structure. How big a premium should seniors pay? How high should the deductible be set? Should seniors be fully covered for the cost of drug treatment for chronic diseases? "We're a long, long, way from settling anything," says one top Senate GOP staffer.

In addition, Congress faces bitter divisions over how seniors should get the benefits. Some lawmakers, such as Senator Bob Graham (D-Fla.) want to add it to the traditional Medicare program. Others, such as the House GOP leaders and Senator John Breaux (D-La.), insist that seniors should be able to buy the coverage through private insurers. The powerful drug industry is pushing hard for a private plan.

And all the plans have one other problem: money. With Washington suddenly facing deficits for years to come, lawmakers are going to have to find a way to pay for such a hugely expensive new program. Where will lawmakers get the $500 billion-plus the plan will end up costing. Raise taxes? Cut other programs? Just increase the deficit? Nobody has any good ideas.

"MEAT AND POTATOES." The fate of any drug benefit lies largely with Hill Democrats. Most are convinced that the issue is a political winner at a time they're struggling to get traction against an immensely popular President. An Apr. 2-4 poll by party strategist Stan Greenberg reported that 45% of those surveyed have more confidence in the ability of Democrats to address the Medicare drug problem, while only 22% prefer the GOP. Greenberg calls the issue "meat and potatoes" for Democrats.

And therein lies an interesting twist: Because the issue resonates so strongly with voters, many Democrats don't want it settled before November. Instead, they would prefer to deride GOP drug plans as insubstantial, vowing instead to enact one of their more-generous versions next year.

Republicans figure they need to neutralize the issue for fear of a big voter backlash if they're blamed for inaction this year. They're betting that passing their own version in the House will protect them from voters' wrath.

IT'S YOUR FAULT. Besides, such a step might even force Senate Democrats to cut a deal -- giving the GOP an October signing ceremony in the Rose Garden. If not, they hope that passing a bill in the House will at least allow them to blame Senate Democratic leader Tom Daschle (D-S.D.) for blocking a drug measure, just as they have blasted him for stalling other important bills this year.

Some day, Washington will add a drug benefit to Medicare. As prescription medicines become an increasingly important part of health care, it makes little sense to have an insurance program that excludes drugs. But it may take another election -- or two -- before the pols finally get around to doing it. Gleckman is a senior correspondent in BusinessWeek's Washington bureau. Follow his views every Tuesday in Washington Watch, only on BusinessWeek Online

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