Senate Passes Medicare Bill

The Senate (search) voted 54-44 Tuesday to update Medicare (search) and give a prescription drug benefit (search) to the 42 million seniors receiving the 38-year-old entitlement -- a major legislative victory for President Bush.

The passage of the bill designed to have the government co-pay seniors' prescription drug costs makes for the most extensive overhaul of Medicare since the health-care program was created in 1965.

"This is a tremendous milestone. It is great news for seniors of our nation," said Sen. Christopher "Kit" Bond, R-Mo.

"Prescription drugs in the past have been denied to our seniors, but will be there as a result of this legislation," Senate Majority Leader Bill Frist, R-Tenn., said shortly after the vote.

In one of its last acts before adjourning for the holiday, Congress will send the massive bill to the president for his signature. The House approved the legislation Saturday morning.

Bush has been pinning his domestic record on passage of the bill, and will now have the achievement in time to campaign next year for re-election.

"The president is pleased by the Senate's action today" a White House official told Fox News. The bill keeps its "obligations to 40 million seniors who deserve a modernized Medicare system with prescription drug benefits."

The president "looks forward to signing it into law," the official said.

But opponents of the legislation said they are sure Congress will have to revisit the measure in the next 12 months.

"I am not proud of this bill," said Senate Minority Leader Tom Daschle, D-S.D.

"The test of every great civilization is how it cares for its elderly," said Sen. Ted Kennedy, D-Mass., one of the staunchest foes of the measure. "I am absolutely convinced that at the end of the day we will preserve the Medicare system, which is threatened, threatened seriously by this proposal, and we will get the day when we have a real prescription drug program, which our seniors deserve and which this nation owes to those individuals."

On Monday, opponents tried — and failed — to get enough support for a procedural vote that would send the measure back to the drawing board.

After the unsuccessful efforts to block the bill from final passage, Senate lawmakers agreed to hold a vote Tuesday on the package.

Unlike the vote in the House, which approved the legislation 220-215 with little party crossover, the Senate vote was built on bipartisan consensus.

In the end, nine Republicans voted against the entitlement, saying it costs way too much -- $395 billion over 10 years -- while 11 Democrats and Independent Jim Jeffords of Vermont voted for the measure, saying seniors need immediate assistance and shortcomings in the bill can be worked out later.

This was a "bipartisan vote reflecting the spirit of cooperation and partnership from the outset," Frist said.

Sen. Max Baucus, D-Mont., a Democrat who helped usher through the bill, said the debate wasn't as jovial as Frist suggested. Sporting a black eye from a fall he took while running a 50-mile race, Baucus joked he sustained the injury during a meeting with the Democratic caucus.

At its heart, the Medicare legislation was designed as a compromise, with the new drug coverage for all Medicare beneficiaries long sought by Democrats combined with a Republican-backed plan to give private insurance companies a vast new role in health care for the program's beneficiaries.

Under the legislation, the prescription drug benefit will not begin until 2006. In the interim, seniors will be eligible to purchase a Medicare-backed discount drug card at an estimated cost of $30 a year. The administration estimates this will mean savings of between 15 percent and 25 percent off retail prices.

Critics argue those estimated savings are wildly inflated.

The drug benefit will provide subsidies to help lower-income seniors pay the premiums and other costs.

The measure also goes far beyond prescription drugs, including an additional $25 billion for rural hospitals and health care providers, a requirement for higher-income seniors to pay more for Medicare Part B coverage and billions of dollars to discourage corporations from eliminating existing coverage for their retirees once the new government program begins.

The bill also gives incentives to insurance companies in hopes they'll offer private coverage to seniors — a provision viewed with favor by conservatives but suspicion by many Democrats. The bill satisfies conservative goals, including creation of tax-preferred health savings accounts open to individuals who purchase high-deductible health insurance policies.

The legislation creates a limited program of direct competition between traditional Medicare and private plans, beginning in 2010.

Conservatives argued that competition would help bring down the cost of Medicare over the long run, while critics said it would privatize the program and lead to "cherry picking" of relatively healthy seniors by insurance companies and higher premiums for those seniors who remained under the government-designed benefit.

Senate approval of the bill gives Bush and the congressional Republican majorities a significant legislative and political triumph on an issue that Democrats have long exploited in political campaigns.

Kennedy said the bill would ultimately cause "the unraveling of the Medicare system." He predicted Republicans would go on to attack Social Security after next year's election.

"We move now from the floor of the United States Senate to the highways and byways of this country, and the senior citizen centers to the nursing homes to the other locations seniors gather where they will have a chance to come together and begin to express their views. Now it will be in the ballot box," he said.

Bush is eager to sign the bill into law, especially now that Congress has dropped efforts to pass major energy legislation this year — another Bush priority — after repeated attempts failed to find two additional votes needed to push the bill through the Senate.

Sens. John Kerry of Massachusetts and Joe Lieberman of Connecticut, both presidential candidates, skipped the final vote to get back on the campaign trail. They had returned to Washington on Monday to support blocking measures by Democrats.

The Associated Press contributed to this report.