Shift against drug benefits in Medicare

The push to add a prescription-drug benefit to Medicare could be running into trouble.

New obstacles - including the exploding federal deficit and a revolt on the issue by conservatives in the House - may be making it less likely that omnibus Medicare reform will clear Congress this year.

As is so often the case with complicated bills, delay may equal denial. If consideration of Medi-care is pushed into the 2004 legislative season, the pressures of presidential politics might stall passage for the foreseeable future.

"There is a real conservative backlash to the Medicare bill," says Stephen Moore, president of the Club for Growth, a group dedicated to tax cuts and lower government spending.

There are many reasons why Medicare reform could still pass this year, of course. President Bush and Democratic leaders have said they want to provide some sort of drug benefit for America's retirees. The House and Senate have approved their own versions of Medicare legislation, and a conference committee charged with unifying the bills has been at work for some months.

The current logjam impeding progress could clear quickly, particularly if the White House gets involved. Important disagreements about the bill's future are between Republicans, after all. Passage of Medicare drug benefits might help Bush deflect Democratic attacks against his domestic policies in next year's campaign.

Still, the political context of Medicare reform has changed rapidly this fall.

Problem number one is the deficit in general, and spending for the Iraq war in particular. President Bush's request for $87 billion for Iraq earlier this month shocked many in Washington. The official price tag on Medicare drug benefits - $400 billion over ten years - suddenly seemed more expensive.

Two years ago the Congressional Budget Office projected that fiscal 2003 would end with the US $353 billion in the black. Instead, Uncle Sam will be over $400 billion in the red when the fiscal year ends on September 30. All claims on government revenues, from drug benefits to tax cuts, face new scrutiny in this era of deficits redux.

Problem number two for the Medicare bill is the increased restiveness of some House Republicans.

Recently 13 conservative representatives signed a letter to Speaker of the House Dennis Hastert (R) of Illinois threatening to vote against final passage of the Medicare bill unless it includes provisions aimed at preventing drug-program costs from rising.

The conservative bloc said they were particularly worried about a recent Congressional Budget Office report which said the drug benefit's $400 billion price tag was wrong, and that the program would actually cost $450 billion over the next decade. "This is very troubling, especially considering the history of federal entitlement programs costing far more than their early projections," the lawmakers wrote.

Furthermore, conservative signees demanded that the final bill not impose price controls on the drug industry, and that it authorize tax-favored medical savings accounts for individuals and more competition between private plans and Medicare.

This latter point is particularly contentious, as many Democrats see it as a stalking horse for privatization of a key government program. Some Democrats have said they would vote against any bill that expands the role of private firms or does not guarantee that the government will be a fallback provider of drug benefits.

Since the House passed its bill earlier this year by one vote, any unified faction may have substantial leverage over final action. So many groups have made so many demands that it is hard to see where common ground might lie.

Drug reimportation is another potential roadblock. Representatives from both sides of the aisle have begun pressing for any final bill to include a provision allowing consumers to buy cheaper drugs in Canada. Recently 142 House Democrats signed a letter saying they would be "unlikely to support a Medicare drug benefit" that does not include such a provision.

The drug benefit in question is complicated, with a daunting array of deductibles and spending caps to hold down costs. Some retirees worry that passage of a federal program might cause former employers to drop drug coverage for former employees.

But the powerful AARP strongly backs inclusion of prescription drugs in Medicare reform, as do many large corporations. The AARP is pushing its members to pressure lawmakers for action - now. "This is crunchtime" for a drug benefit, said a recent member bulletin.

If it is indeed a crucial time, the pace of the 17-member conference committee does not show it. The full panel has held only one formal meeting this month.

The final fate of Medicare reform may depend on pressure from the White House. With Republicans in control of the House, Senate, and White House, passage of a bill could give the GOP electoral bragging rights - as failure would provide an easy target for Democrats next fall. "The odds are still that Bush will prevail" on the issue, says Stephen Moore of the Club for Growth.