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Bush signs landmark Medicare bill into law

President Bush: 'Giving older Americans better choices'

President Bush is congratulated after signing the Medicare reform legislation on Monday at the DAR Constitution Hall in Washington.
President Bush is congratulated after signing the Medicare reform legislation on Monday at the DAR Constitution Hall in Washington.

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President Bush signs the new Medicare legislation.
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WASHINGTON (CNN) -- President Bush on Monday signed into law landmark Medicare reform legislation that includes prescription drug benefits and has sparked a bitter fight between opponents and supporters.

Speaking at DAR Constitution Hall in Washington, Bush characterized the measure as "the greatest advance in health care coverage for America's seniors since the founding of Medicare."

Backers say the $400 billion Medicare Prescription Drug Modernization Act will provide much-needed help for the nation's 40 million senior citizens to buy medications; critics say it is a giveaway to drug makers and insurance companies and a prelude to the dismantling of the program. (Interactive: Prescription coverage)

"Our government," Bush said, "is finally bringing prescription drug coverage to the seniors of America."

"With this law, we're giving older Americans better choices and more control over their health care, so they can receive the modern medical care they deserve," he said.

In addition to the prescription drug benefits, the measure provides billions of dollars in subsidies to insurance companies and health maintenance organizations, and takes the first step toward allowing private plans to compete with Medicare. (Interactive: Prescription for change)

It is the largest expansion of Medicare since the program was created in 1965, though most of its provisions won't take effect for several years. The drug benefit, for example, does not take effect until 2006. Before that, seniors will be able to purchase a discount card that could provide a 10 to 25 percent off prescription drugs.

"Our nation has made a promise, a solemn promise, to America's seniors," Bush said. "We have pledged to help our citizens find affordable medical care in the later years of life."

"These reforms are the act of a vibrant and compassionate government," Bush said.

How the bill is to work

In 2006, Medicare recipients will pay $35 per month with a $250 deductible for prescriptions. The plan will pay 75 percent of costs up to $2,250. The prescription drug provision left out a proposed guideline the president had originally sought -- requiring seniors to join an HMO to be eligible for the benefit.

The law also allows the importation of drugs from Canada -- where many are cheaper -- but only if the Food and Drug Administration has approved the drugs.

It also provides subsidies to private insurers to compete with traditional Medicare, giving seniors the opportunity to join managed-care plans, which typically cut costs by restricting patient access to specialists. That provision does not take effect until 2010.

Last month, the House passed the measure after Bush made late-night, last-minute phone calls asking members to support it. An unusually long three-hour vote was ended by GOP leaders at 6 a.m., after a 218 to 216 deficit flipped to a 220 to 215 victory.

The Senate's 54-to-44 vote was not entirely along party lines -- 10 Democrats voted in favor and nine Republicans voted no. (Senate passes Medicare bill)

On the day it passed the Senate, Majority Leader Bill Frist of Tennessee called the overhaul "epochal in the sense it modernizes Medicare to provide 21st century care for our seniors."

Opponents of the legislation warned that seniors would demand that Congress revisit the issue once they realized what the bill does and does not do. High on the list of things not covered in the bill is a mechanism to stem rising prescription drug costs. Sen. Dianne Feinstein, D-California, who supported the bill, said the lapse was a "major weakness in this bill."

"The theory is that private sector competition will drive down the cost of drugs," Feinstein said last month upon the bill's passage. "That may happen, or it may not happen. We need to watch that, and we will. I feel confident that the leadership will make changes if the cost containment is not kept."

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