Senators battle on Medicare package

Democrats reject plan for competition between U.S., private programs


WASHINGTON - A congressional team was negotiating late yesterday over Medicare legislation that would cover prescription drugs, but Senate Democrats warned that they would reject the package if it forced the government health insurance program to compete with private plans.

Setting up such a competition for beneficiaries' premium dollars would mean "the demise of Medicare as we've known it," said Senate Minority Leader Tom Daschle. The South Dakota Democrat called it "virtually a show-stopper."

Daschle stopped short of threatening a Democratic filibuster if the House-Senate negotiators adopt a package laced with Republican-sponsored private-sector solutions to Medicare's fiscal ills.

But he made it clear that Democrats wouldn't budge in their opposition to such elements, even if it means having to defend themselves against Republican election year attacks that Democrats had blocked a long-awaited prescription drug benefit.

Thirty-nine Democrats, one independent - Sen. James M. Jeffords of Vermont - and one Republican - Sen. Olympia J. Snowe of Maine - wrote President Bush to warn that any legislation "that jeopardizes Medicare" would fail to pass the Senate.

While Republicans maintain a 51-49 majority in the Senate, it takes 60 votes to cut off debate and proceed to a vote.

Meanwhile, House and Senate negotiators reported progress in their efforts to agree on overhauling Medicare, the federal health insurance program that covers 40 million elderly and disabled persons.

The negotiators are attempting to weave a compromise out of widely divergent Senate and House bills that each chamber approved in June.

One of the negotiators, Rep. Billy Tauzin, the Louisiana Republican who heads the House Energy and Commerce Committee, predicted that a breakthrough could be reached as early as today.

The negotiators have agreed on the outlines of the actual prescription drug benefit. Under the deal, beneficiaries would pay an average $35 monthly premium and a deductible of $275 a year. Then, beneficiaries would pay 25 percent of prescription costs up to $2,220 and Medicare would pay the rest.

Medicare would pay nothing for beneficiaries racking up $2,200 to $3,600 in annual drug expenses. But a patient paying more than $3,600 out of pocket would then have to pay only a small co-pay, and Medicare would pick up the rest.

Lawmakers have said the gap in coverage, known in Congress as the "donut hole," is necessary to keep the government's prescription expenditures within the congressionally mandated cap of $400 billion over 10 years.

In addition to drug coverage and the question of competition between Medicare and private plans, negotiators are trying to work out these issues:

Requiring Medicare to offer full coverage of prescription costs in rural areas if private plans shun them because profits are slim. Farm-state lawmakers want such coverage and are fearful of losing it if Medicare prescription coverage is signed into law.

Keeping the cost to $400 billion over 10 years. Republicans want to keep the cost at that level, but many Democrats such as Rep. Charles B. Rangel of New York, say twice that amount may be necessary to provide effective drug coverage and prop up the fiscally fragile Medicare system.

The most contentious issue appears to be Medicare competition.

House Republicans who approved it in their version of the bill insist it must remain in order to save Medicare, which is projected to become insolvent by 2026 if nothing is done.

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