Medicare’s next on president’sdomestic agenda

/ Source: The Associated Press

President Bush added Medicare to the government’s fix-it list Wednesday after new figures showed the first full decade of the program’s prescription benefit will cost taxpayers $724 billion.

“There’s no question that there is an unfunded liability inherent in Medicare that Congress and the administration is going to have to deal with over time,” Bush told reporters.

“Obviously I’ve chosen to deal with Social Security first,” he added. “Once we modernize and save Social Security for a young generation of Americans, then it’ll be time to deal with the unfunded liabilities of Medicare.”

The new figure for years 2006 through 2015 is much higher than the $534 billion cost calculated for years 2004 through 2013. That’s because under the previous decade-long projection, the benefit didn’t exist for two of the 10 years.

Congress passed the prescription drug benefit at the end of 2003, but except for some low-income seniors, it delayed making it available until January 2006. Nonetheless, several lawmakers said Wednesday that they had been deceived on the program’s true cost.

“This new information further demonstrates what appears to be an attempt to dupe Congress and win passage of the legislation,” said one such lawmaker, Sen. Dianne Feinstein, D-Calif., calling for an investigation by the Senate Finance Committee.

Costs scare skeptical Republicans
Some Republicans long skeptical of the administration’s estimates also expressed alarm at the escalating costs as more people reach age 65 and qualify for it and drug prices continue to rise.

“I do think we are going to have to go back and readdress it,” said Senate Budget Committee Chairman Judd Gregg, R-N.H.

Congress narrowly approved the drug legislation in 2003 after an extraordinary all-night debate. At the time, the administration told wavering lawmakers that the program would cost $400 billion, including expected savings. The White House revised the estimate to $534 billion just two months later, after the law was enacted.

New price tag: $724 billion
The $724 billion figure is in documents obtained Wednesday by The Associated Press and related to the president’s Monday budget request to Congress. Without anticipated savings included in the calculation, the cost of the program over the next decade could swell to $1.19 trillion, according to the documents.

White House Budget Director Joshua Bolten said the new price tag of $724 million reflects $134 billion in savings the government expects because states are paying some drug costs, $145 billion more from beneficiaries’ premiums and $200 billion in savings by switching some Medicaid prescription benefits to Medicare.

Under the program:

  • Participants must pay monthly premiums that are expected to average $35 in 2006.
  • The participants must pay out of their pockets the first $250 in pharmacy bills.
  • Medicare will then pick up 75 percent of the next $2,000 in prescription expenses.
  • Then a gap is built into coverage, during which participants must pay all drug costs until the total tops $5,100.
  • The government will then pay 95 percent of prescription bills above $5,100 a year.