Medicare cost estimate is raised by $50 billion

Congress' budget office says Clinton understated price of drug coverage


WASHINGTON -- The Congressional Budget Office said yesterday that President Clinton had grossly underestimated the cost of his proposal for Medicare coverage of prescription drugs.

Dan L. Crippen, director of the budget office, also told Congress that Clinton had overstated the savings that could be achieved by his proposals to redesign Medicare and encourage competition in the traditional fee-for-service program.

When Clinton unveiled his drug proposal June 29, he said it would cost $118 billion over 10 years. The Congressional Budget Office says the cost would be $168 billion.

The budget office number is higher by 42 percent.

The estimate has many political ramifications. It will give Republicans a reason to support a much more limited Medicare drug benefit, as Congress is normally obliged to use the cost estimates from its own budget office.

On a trip to Michigan yesterday, Clinton defended his proposal to offer coverage of prescription drugs to all 39 million Medicare beneficiaries.

He said that 75 percent of elderly Americans "either have no drug coverage at all, or coverage that is unstable, unaffordable and rapidly disappearing."

Congress wrestled with the details of Clinton's proposal yesterday for the first time, as Donna E. Shalala, the secretary of Health and Human Services, testified before the Senate Finance Committee.

Republicans and a few Democrats told her they had grave doubts about the president's proposal.

Republican Sen. Connie Mack of Florida said the proposal "will cause an explosion in the cost of the Medicare program," and he suggested that it would make more sense to provide drug benefits at first to low-income Medicare beneficiaries with no other drug coverage.

While criticizing Clinton's proposal, Republicans expressed sympathy for elderly people struggling with high drug costs -- a potentially influential group of voters in next year's elections.

The chairman of the Finance Committee, Republican Sen. William V. Roth Jr. of Delaware, said he intended to "move ahead very promptly in September" with legislation to provide some Medicare drug benefits.

But Roth made it clear that his proposal would be less comprehensive and less costly than Clinton's.

The Congressional Budget Office said its estimate of the costs of prescription drug benefits was higher than the president's for four reasons.

The budget office assumes faster growth in drug spending for the elderly.

Crippen said his office took account of drug spending for nursing home residents, which the administration had apparently overlooked.

If Medicare starts to cover prescription drugs, Crippen said, many low-income people will apply for federal assistance in paying the premiums and other costs normally borne by beneficiaries.

The president wants to hire private companies to manage drug benefits for the elderly, Crippen said, but he would restrict their activities so they could not save as much money for Medicare as they now save for private employers and HMOs.

Pub Date: 7/23/99

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