Bush Promises to Sign Medicare Overhaul

"Just what the doctor ordered" took on new meaning Tuesday as the Senate passed a Medicare (search) prescription drug benefit, which President Bush hailed as a milestone for America's seniors.

The bill represents the biggest overhaul of the 38-year-old entitlement program since its creation.

Senate Majority Leader Bill Frist (search), who is also a world-renowned transplant surgeon, gave Bush a highly-sought domestic accomplishment by handing the president a major victory as he heads into an election year.

"The United States Senate has joined the House of Representatives in passing a historic reform of Medicare that will strengthen the system, that will modernize the system, that will provide high quality care for the seniors who live in America," Bush told seniors during a Thanksgiving week visit to Las Vegas.

The Senate approved the bill on Tuesday morning after five days of nearly non-stop debate and several attempts to block it with procedural tactics. In the end, the bill passed the Senate 54-44. It was approved by the House on Saturday morning after Bush intervened with conservative Republicans, forcing some vote-switching that ended up giving GOP leaders a 220-215 victory.

The Medicare reform bill is designed to have the government co-pay seniors' prescription drug costs. Supporters of the measure say that since drug therapies have changed so enormously since Medicare was first introduced, covering the costs of prescription drugs will be much lower than hospitalization or surgery and will help prevent the 42 million seniors on Medicare from having to face those more critical options.

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

But Democratic opponents complain that the bill is a giveaway to insurers and drug companies. Sen. Edward M. Kennedy (search), D-Mass., who with Senate Minority Leader Tom Daschle (search), D-S.D., led the vocal opposition, said the bill will dump seniors "in the cold arms of the HMOs."

At its heart, the Medicare legislation was designed as a compromise between moderate Democrats and Republicans who wanted to expand drug coverage for all Medicare beneficiaries while also creating competition that would give private insurance companies a vast new role in health care for the program's beneficiaries.

The bill 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 argue that competition will help bring down the cost of Medicare over the long run, while critics say it will privatize the program and lead to "cherry picking" of relatively healthy seniors by insurance companies and higher premiums for those seniors who remain under the government-designed benefit.

"The Medicare plan that I am going to sign understands that a lack of competition meant that there was no real need to provide innovation, so we're helping to change the system by giving seniors more options and more choices," Bush said.

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.

Though opponents have stressed the pay-off to insurance companies, Bush promised the bill will give seniors more choice. He added that it will also help doctors provide better care.

"If there is a demand-driven system, it means the doctor-patient relationship is going to be more firm and it means people will have better choices to meet their own particular needs," he said.

"Rural hospitals need help to continue to serve our country.  This bill sets fair reimbursement rates for doctors serving Medicare patients. This is a good bill and I'm looking forward to signing it."

While on the topic of health care, Bush also told audience members that he is seeking reforms to medical malpractice laws, saying that "junk lawsuits (search)" make health care less affordable or available by driving good doctors out of the system and driving up the cost of health care through large insurance premiums on medical practices.

"It is estimated that the defensive practice of medicine raises the federal budget by $28 billion a year. You see, we fund Medicare, Medicaid, veterans' health benefits, for example. Lawsuits affect our budget. Therefore, I view this as a national problem which requires a national solution," he said.

The House passed a medical malpractice reform bill earlier this year, but it is currently stalled in the Senate. Bush appealed to seniors to call their senators and tell them to support the bill.

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.

Daschle added that he is sure the issue will be on seniors' minds in 2004, but that won't help Bush.

"Seniors by an overwhelming margin oppose this legislation," Daschle 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.