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AMERICAN MORNING

Medicare Miscalculation

Aired January 30, 2004 - 07:31   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

SOLEDAD O'BRIEN, CNN ANCHOR: Well, President Bush won't officially release his 2005 federal budget until Monday, but an early check of the numbers shows a drastic increase in the cost of one of Mr. Bush's recent legislative victories, the new Medicare law.
White House correspondent Dana Bash joins us with more on this from the White House this morning -- hey, Dana, good morning.

DANA BASH, CNN CORRESPONDENT: Good morning, Soledad.

And sources tell us that the White House is now estimating that that cost, the new prescription drug benefit for Medicare, is going to be one third higher originally thought. Originally it was estimated at $400 billion over 10 years. The president's 2005 budget will put that cost between $530 billion and $540 billion, probably about $535 billion.

Now, why the increase? Nobody at the White House can answer that exactly, except to say that health care costs are by definition hard to estimate. Democrats are saying this is proof that they need to get more curbs on the high cost of drugs -- Soledad.

O'BRIEN: Dana, a quick question for you. Obviously you can imagine there must be lots of fallout from the Democrats. But, also, I have to imagine that conservative Republicans not thrilled, as well.

Is that fair to say?

BASH: Very fair to say. In fact, congressional Republicans are meeting in Philadelphia today for a retreat; yesterday, as well. And we are told that when the new hit of this increase, they essentially hit the roof, many conservatives. But remember, this passed by very narrow margins in Congress, particularly in the House, where conservative Republicans did not want what they called a big new government program. They were promised that the cost would not rise and they are certainly not happy about this. And, of course, this comes on the heels of the fact that they are very upset about the fact that the deficit is very high. And sources tell us that the president's new budget will say that this year the deficit will be a record $520 billion -- Soledad.

O'BRIEN: Dana Bash, a big number, at the White House for us this morning.

Dana, thanks.

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