updated 11/15/2003 2:07:32 PM ET 2003-11-15T19:07:32

Republican congressional leaders said they sealed a tentative agreement Saturday on a new prescription drug benefit for the nation’s seniors, which would be the largest expansion in Medicare’s history.

“WE HAVE come to an agreement on principles,” Senate Majority Bill Frist said.

Talks that lasted most of the day smoothed over the last remaining wrinkles in the bill, including a proposal to have traditional Medicare compete directly with new private insurance plans and a plan to encourage employers to maintain drug coverage for retirees, officials said.

Two key Democrats, Sens. Max Baucus of Montana and John Breaux of Louisiana, joined Frist, Speaker Dennis Hastert of Illinois and other top Republicans in Frist’s office to announce the accord, which Baucus stressed would remain tentative until lawmakers had a chance to see the details of the complex legislation.

But the agreement ends months of negotiations over the drug benefit and a broad reworking of the Medicare program to give private insurers a new large role in health care for 40 million older and disabled Americans.

It must win approval of House and Senate negotiators, many of whom have been meeting for months in search of a compromise. The legislation would then go to the full House and Senate, where tough questions await from lawmakers in both parties.

The prescription drug bill has been a top domestic priority for President Bush, who earlier Saturday used his radio address to make another appeal for a bill.

“Congress has an historic opportunity to give all our seniors prescription drug coverage, health care choices and a healthier, more secure retirement,” the president said.

Frist predicted the call would be answered. “We are very optimistic we’ll be able to send a bipartisan bill to the president ... in the next few days,” he said.

COMPROMISE REACHED ON COMPETITION

Lawmakers believe they have found a way to reduce the number of retirees who would lose their employer-based coverage, without increasing the $70 billion they had set aside to achieve that. That issue has been a top concern of the politically potent AARP.

At the same time, their new proposal would provide more money to low-income seniors who currently receive their drug coverage through Medicaid, the joint federal-state program for the poor.

Baucus said he was pleased by the changes, which Republicans devised and then presented to the two Democratic negotiators.

They also reached a compromise on the sensitive issue of competition within the government-run health program, agreeing to a program lasting up to six years and involving six metropolitan areas, Republican congressional aides said.

The legislation would install the most far-reaching changes to the program since it was created in 1965. At its core, it would give millions of older Americans a prescription drug benefit, projected to cost $400 billion over 10 years.

The bill would provide drug discount cards for seniors in 2004 and 2005, estimated to reduce drug costs an average of 15 percent.

At the same time, private insurance companies would play a significant role in Medicare by delivering prescription drugs and offering managed-care plans or new preferred provider organizations. Those organizations encourage patients to use doctors inside a network but allow them to see other physicians for an extra charge.

The sweeping legislation also would send more money to rural doctors and hospitals.

Unrelated to Medicare, it would create a health-related tax break for individuals with high-deductible insurance policies, one of several demands made by conservatives in exchange for their support for the drug benefit.

Lawmakers also have agreed essentially to maintain a ban on importing cheaper prescription drugs from abroad, despite the growing popularity of such imports across the country and in Congress.

Direct competition between traditional Medicare and the new private plans has been the most vexing issue in the nearly five months since the House and Senate passed differing versions of the Medicare bill.

Democrats and some moderate Republicans strongly oppose the competition, saying it would drive up premiums for people who opted to stay in traditional Medicare. The government-run program allows beneficiaries to choose their doctors and hospitals.

© 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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