Bush Administration Opposes Move to Delay Medicare Premium Increase

NY Times
September 15, 2004
Bush Administration Opposes Move to Delay Medicare Premium Increase
By ROBERT PEAR

WASHINGTON, Sept. 14 - The Bush administration came out Tuesday in opposition to Democratic proposals to hold down the scheduled 17 percent increase in Medicare premiums next year, saying that a one-year freeze would lead to much higher premiums in 2006.

Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said the premiums would rise 20 percent in 2006 if Congress blocked the increase planned for next year. Under current law, the monthly premium is scheduled to be $78.20 next year, up $11.60 from the premium this year. In most cases, the amount is deducted from Social Security checks.

Democrats and a few Republicans have expressed concern about the increase planned for 2005. Dr. McClellan said it reflected higher projected Medicare spending, attributable in part to an increase in payments to doctors and improvements in benefits.

The elderly "will be getting more benefits than ever,'' he said.

John Kerry, the Democratic presidential nominee, has charged that Medicare premiums are increasing 56 percent since Mr. Bush took office in 2001, when they were $50.

But Senator Gordon H. Smith, Republican of Oregon, said: "President Bush is not to blame for this. He is following the law.'' A 1997 law specified that premiums should be set to cover roughly 25 percent of the cost of Part B of Medicare, which pays for doctors' services and other outpatient care.

Dr. McClellan, testifying Tuesday before the Senate Finance Committee, gave an upbeat assessment of the new Medicare law, which Republicans pushed through Congress last year, over the opposition of most Democrats, who said the measure did more to help insurance and pharmaceutical companies than elderly people or the disabled.

New insurance for the cost of drugs under Medicare is scheduled to begin in 2006. Since June, beneficiaries have been able to save money by using Medicare-approved drug discount cards.

The government had estimated that by December, 4.7 million low-income people would have discount cards and would qualify for extra assistance of $600 a year in 2004 and 2005. But to date, Dr. McClellan said, only 1.3 million low-income people have signed up for such "transitional assistance.''

Discount cards are available to Medicare beneficiaries with higher incomes as well. As of Sept. 2, Dr. McClellan said, cards have been issued to a total of more than 4.3 million beneficiaries, or nearly 60 percent of the 7.3 million expected to enroll by the end of the year.

Senator Max Baucus of Montana, the senior Democrat on the Finance Committee, voted for the new Medicare law, but said he detected little enthusiasm for the discount cards.

"I believe there are too many choices,'' Mr. Baucus said. "Too many choices, too many options can result in paralysis.''

A Web site, www.Medicare.gov, displays prices for more than 60,000 drug products that can be purchased with 73 discount cards at more than 50,000 pharmacies.

Democrats stepped up pressure on the Senate majority leader, Bill Frist, Republican of Tennessee, to allow a vote on legislation permitting imports of inexpensive prescription drugs from Canada.

Dr. Frist indicated that he had no immediate plans to bring up such legislation, because he feared it could expose consumers to unsafe drug imports. But Democrats said they would find a way to get a Senate vote on the issue before Congress adjourns for the Nov. 2 election.

In July 2003, the House voted to allow Americans to import drugs from Canada and Europe, despite intense efforts to defeat the bill by officials of the Food and Drug Administration, including Dr. McClellan, who was then head of the agency.

To speed the confirmation of Dr. McClellan in his new job, Senator Frist said on the Senate floor, on March 11, that "the Senate will begin a process for developing proposals that would allow for the safe reimportation of F.D.A.-approved prescription drugs.'' Senator Byron L. Dorgan, Democrat of North Dakota, said Tuesday that the process had "led to nothing.''

The new Medicare law offers subsidies to employers as an incentive for them to continue providing drug benefits to retirees.

Dr. McClellan said "retiree coverage has been in decline for many years,'' and he said the new law could reverse that trend.

But Gerald M. Shea, assistant to the president of the A.F.L.-C.I.O., told the Finance Committee: "We are very nervous. We are nervous and afraid.'' Rules proposed by the Bush administration "offer too few protections for retirees'' and could "produce some momentum to further reduce retiree coverage, just the opposite of what was intended by Congress,'' Mr. Shea said.