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Bush: Medicare Drug Benefit Tied To Overall Reform

Working quickly, President Bush has drafted the first half of his prescription drug plan for Medicare and sent it to Congress. But the so-called "immediate helping hand," a short-term block grant program to subsidize prescriptions for low-income beneficiaries while Congress works out a permanent benefit, has few supporters in Congress. Both parties want to decide the bigger issue now.

The Democrats' position is familiar: a universal prescription drug benefit tacked onto the existing Medicare program. Bush has put a stake in the ground, favoring a drug benefit only as part of larger Medicare reforms similar to those recommended last year by a blue-ribbon panel headed by Louisiana Democratic Sen. John Breaux and Tennessee Republican Sen. Bill Frist.

The Republican chairman of the Senate Finance Committee, Charles Grassley of Iowa, says he will not entertain the reform package, and instead plans to work with Democrats to pass a drug benefit of some sort by summer and make incremental reforms to Medicare. Washington insiders say the GOP does not have the votes to pass a large-scale reform bill, and both parties are more eager to cut a deal and pass compromise legislation to establish a drug benefit, rather than become mired again in gridlock.

Still, reform advocates are going to try. A bill introduced Feb. 16 by Breaux and Frist is modeled on the panel's recommendations. Under it, a new Medicare board would establish a competitive system to pay Medicare+Choice plans and beckon them back to the program. Incidentally, making participation in Medicare more attractive to plans had been Congress's intent last year when it agreed to restore $12 billion, over five years, in funding that had been stripped from them by the Balanced Budget Act.

But from Congress's point of view, Medicare HMOs — which had been trimming supplementary benefits as expenses mounted — were supposed to use the cash to add benefits. Instead, health plans are using the extra funds to boost payment rates to physicians and hospitals, who long considered them inadequate, and thus expand their provider networks. Expect both parties to bring this up as reform talks get under way.

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