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Congress passes Medicare overhaul

The U.S. Senate on Tuesday approved the biggest overhaul in Medicare’s four-decade history, and the bill next goes to President Bush, who has promised to sign it.
/ Source: news services

The Senate gave final congressional approval Tuesday to the most sweeping changes to Medicare since its creation in 1965, including a new prescription drug benefit for 40 million older and disabled Americans. The 54-44 vote sends the bill to President Bush, who said Medicare “was becoming old and it needed help.”

“BECAUSE OF the actions of Congress, because of the actions of both political parties, the Medicare system will be modern and it will be strong,” Bush said in a speech at a hospital in Las Vegas, where he traveled Tuesday to also fundraise and campaign.

Forty-two Republicans, 11 Democrats and an independent backed the legislation. Nine conservative Republicans joined 35 Democrats in opposition.

Supporters said the $395 billion measure, which gives private insurers a large new role in health care for seniors, was a long overdue change.

Seniors “will finally have the prescription drug coverage they need and the choices they deserve,” Senate Majority leader Bill Frist of Tennessee said. “At the same time, it preserves traditional Medicare.”

Democratic opponents, resigned to defeat, said the bill was a giveaway to insurers and drug companies. Sen. Edward Kennedy, D-Mass., said it will dump seniors “in the cold arms of the HMOs.”

“It didn’t have to be this way,” Kennedy said.

Drug coverage will not begin until 2006, but seniors next year will be able to purchase a drug discount card that officials said could reduce their pharmacy bills by 15 to 25 percent.

The House passed the measure near dawn Saturday on a vote of 220-215, and the president is eager to sign it. Final approval gives him and the congressional Republican majorities a significant legislative and political triumph on an issue that Democrats have long exploited in political campaigns.


At its heart, the legislation was designed as a compromise of sorts, the new drug benefit long sought by Democrats combined with a Republican-backed plan to give private insurance companies a vast new role in health care for the program’s beneficiaries.

The scope of the bill goes far beyond that, however, including an additional $25 billion for rural hospitals and health care providers, a requirement for higher-income seniors to pay more for Medicare Part B coverage and billions of dollars to discourage corporations from eliminating existing coverage for their retirees once the new government program begins.

The bill would satisfy other goals of conservatives, including creation of tax-preferred health savings accounts, open to individuals who purchase high-deductible health insurance policies.

Most controversial of all, the legislation would create a limited program of direct competition between traditional Medicare and private plans, beginning in 2010. Conservatives argued that would help bring down the cost of Medicare over the long run, while critics said it would privatize the program and lead to “cherry picking” of relatively healthy seniors by insurance companies and higher premiums for those seniors who remained under the government-designed benefit.

Over and over, supporters of the bill stressed that after years of gridlock, the opportunity to act was at hand.

“If we don’t do this at this time, it may be years” before another opportunity comes along, said Sen. Charles Grassley, R-Iowa, an architect of the bill. “There will never be total agreement,” added Sen. Max Baucus, D-Mont., Grassley’s partner in bipartisanship for months on the issue.

Critics were unmoved. Senate Democratic leader Tom Daschle called the bill a “bailout for the HMOs and insurance companies,” and Sen. Hillary Rodham Clinton, D-N.Y., said the well-being of seniors had been “trumped by the interests of those who have money to make and are taking advantage.”


The bill’s path to passage was cleared in the Senate on a pair of procedural votes, one entirely predictable, the other suspenseful to the end.

First, on a roll call of 70-29, 10 more than needed, the Senate voted Monday to limit debate. A few hours later, Daschle failed in a final attempt to halt the bill’s progress by invoking arcane budget rules. The vote was 61-39, one more than the 60 that supporters needed. For several minutes before the gavel fell, the tally stood frozen at 58-39, three votes not yet cast, neither side certain of victory.

Finally, Sen. Lindsey Graham, R-S.C., cast his lot with the Republican leadership. Then Sen. Trent Lott, R-Miss., did, too. Seeing that Republicans had provided the 60th vote needed, Sen. Ron Wyden. D-Ore., then gave the bill a 61st.


Another pivotal Republican, Sen. Lincoln Chafee of Rhode Island, gave his vote to the Republican leadership after winning assurances that the city of Providence would not be picked for the program of direct competition, according to officials.


Under the legislation, the prescription drug benefit would begin in 2006. In the interim, seniors would be eligible to buy a Medicare-backed discount drug card, at a cost estimated at $35 a year, that the administration estimates would mean savings of 15 percent to 25 percent off retail prices. Critics argue that those estimated savings are wildly inflated.

Lower-income seniors would receive an annual $600 government subsidy for use in conjunction with their cards.

Beginning in 2006, the legislation would allow seniors to buy coverage for their prescription drugs. Republican officials estimate that the premium cost would be $35 a month, with a $250 deductible.

The coverage would pay 75 percent of costs after that until a senior’s drug costs reached $2,250. After that, there would be a gap in coverage until out-of-pocket expenses reach $3,600, or roughly $5,100 in overall prescription expenses. Above that level, insurance would pick up roughly 95 percent of costs.

The measure includes subsidies for low-income seniors.

The Associated Press and Reuters contributed to this report.