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Clinton unveils prescription for modernizing Medicare

June 29, 1999
Web posted at: 5:46 p.m. EDT (2146 GMT)

WASHINGTON (AllPolitics, June 29) -- President Bill Clinton unveiled Tuesday his proposal for a "sensible and fiscally responsible" overhaul of the ailing Medicare program, anchored by a new universal prescription drug benefit for Medicare recipients.

For a $24-a-month premium, the president's plan would cover half the cost of prescription drugs, up to $2,000 a year.

"This is a drug benefit our seniors can afford at a price America can afford," Clinton said. The benefit would begin in 2002, with the monthly premium gradually increasing over six years to $44 a month and coverage rising to $5,000 a year.

While the drug benefit is sure to be popular with Medicare's 39 million beneficiaries, it already has proven politically controversial as Republicans question where the money would come from to pay for the new benefit.

The president said his rescue plan for the 34-year-old program would both modernize Medicare and extend its life at least through 2027. And Clinton said it can be paid for with $794 billion from the federal budget surpluses over the next 15 years.

"There are a thousand ways to use the surplus, all of them arguably attractive, but none more important than first guaranteeing our existing obligation to secure quality health care for our seniors. First things first," Clinton said.

The president's announcement sets up what is expected to be a bitter fight with the GOP-led Congress. Many Republicans argue that less money is needed to keep Medicare afloat, and the extra surplus funds should used for a deeper tax cut instead of new benefits.

Who should pay?

Senate Majority Leader Trent Lott (R-Mississippi) asked what will be a central question in Congress about Clinton's proposal to expand Medicare coverage of prescription drugs: "Who pays?"

"Why would you want to make it available to those who have (such coverage) now? We think it really should be targeted to those who can't afford prescription drugs on their own," Lott said Tuesday.

The new drug benefit, if approved by Congress, would cost $118 billion over 10 years, according to administration estimates. The proposal would waive monthly premiums and drug co-payments for low-income families.

The White House decided to push for universal coverage -- rather than imposing income limits -- after floating the proposal on Capitol Hill last week, according to White House Communications Director Ann Lewis.

Modernizing Medicare

The White House stresses that the drug proposal is only one initiative in its plan to modernize Medicare, a program first enacted in 1965.

Medicare has not kept pace with the advances in medicine over the past three decades, Clinton said, and the changes are designed to help shift Medicare from a system created to treat illnesses to one that also prevents them.

The president wants to eliminate co-payments and deductibles for all preventative tests such as mammograms, prostate and colorectal cancer screenings and diabetes management.

"It makes no sense for Medicare to put up roadblocks to these screenings and then turn around and pick up the hospital bills that screenings might have avoided," Clinton said.

The White House says more competition in Medicare will help offset some of the increased costs from preventative medicine and drug coverage. The president is banking on saving $85 billion over 10 years by implementing competitive bidding for Medicare services and offering financial incentives to managed care programs that cut costs.

The president's proposal would also add a 20-percent co-payment for clinical laboratory services and index some Medicare premiums for inflation.

Bankruptcy fears loom over program

Because of the rapidly increasing number of beneficiaries as the Baby Boom generation approaches retirement age, Medicare, in its current form, is projected to go bankrupt by 2015.

In 1970, about 20 million people were covered by the entitlement program. Today that number has nearly doubled. By 2011 it will more than double again with more than 77 million people eligible for benefits. In 2040, 81 million people are expected to participate.

The president has made shoring up Medicare -- along with Social Security, the nation's other major entitlement program -- the top priority of his domestic agenda this year, and says a majority of the federal budget surplus should be dedicated to that effort.

Based on new larger-than-expected surplus numbers released Monday which project an extra $1 trillion over the next 15 years, Clinton now hopes to invest $100 billion more from surplus monies than were originally submitted in his budget to Congress in February.

Critics of the plan are skeptical that Medicare's solvency can be maintained while new benefits, such as the drug coverage plan, are added.

Playing politics

The politics surrounding retirement benefits always have been ultra-sensitive, and the current Medicare battle will be no different. Already, Republicans say the president's proposal is politically motived and will create false expectations.

Calling the proposal a "cruel hoax," Sen. Phil Gramm (R-Texas) said the whole idea "taints" the political debate. "The idea of having universal coverage makes sense politically, but it makes absolutely no sense economically," Sen. Phil Gramm (R-Texas) explained.

Lewis disagreed, calling the president's plan "fiscally responsible." "We can show you how this will work ... We can afford to do this."

Congressional Democrats have a political interest as well. Some are concerned that if Medicare reform is enacted that Republicans would have an popular issue to brag about on the 2000 campaign trail as the two sides battle for control of Congress.

Still, Sen. Tom Daschle (D-South Dakota) voiced wholehearted support for the Clinton plan. "I think there is overwhelming congressional support for a prescription drug benefit. I think it will be something very close to what the president has proposed."

CNN's Chris Black and John King contributed to this report.


TRANSCRIPT

Clinton announces Medicare rescue plan (6-29-99)


Medicare graphic
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VIDEO

John King reports: Clinton unveils Medicare reform plan (6-29-99) video Windows Media: 28K | 80K

CNN's Chris Black reports on President Clinton's Medicare plan (6-29-99) video Real: 28K | 80K, Windows Media: 28K | 80K


RELATED SITES

White House
AARP Web site
American Medical Association
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Medicare -- Official U.S. Web site
National Bipartisan Commission on the Future of Medicare


'TOONS
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The politics of health care



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Tuesday, June 29, 1999

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