Medicare Drug Benefit Costs on the Rise

The expected increase in the 10-year cost of the Medicare (search) prescription drug benefit has some lawmakers on Capitol Hill accusing the Bush administration of lying about the original estimate given when the bill was passed in 2003.

When the bill passed — by a 220-215 House vote after a three-hour, middle-of-the-night session that relied on GOP leaders cajoling reluctant Republicans to support President Bush's key domestic priority — the $400 billion estimate was said to cover the program's costs between 2004 and 2013, with the first two years dedicated to ramping up the program and the last eight for implementation. Two months after the bill passed, the White House revised the costs upward to $534 billion.

The new estimate — to pay for the 2006-2015 operational costs — will cost taxpayers $720 billion, the Bush administration said Tuesday.

"Of course, the costs go up when you add in more years at the end and more people are on Medicare," Medicare spokesman Gary Karr said.

Office of Management and Budget (search) Director Joshua Bolten told the Senate Budget Committee on Wednesday that the costs were expected to rise once the drug benefit was fully available to seniors on Medicare, a growing number each year. He added that the new price reflects $134 billion in savings that will result from states absorbing some of the drug costs. Another $145 billion in costs will be paid by beneficiaries' premiums and $200 billion in Medicaid costs will be saved.

In other words, the entire 10-year costs of the program would be $1.2 trillion before savings.

The White House's cost estimates are "completely consistent with the numbers the administration has produced before," Bolten said.

House Democrats said the new cost projections are proof the administration has been playing fast and loose with the numbers. "The joke is on the taxpayers and senior citizens of America," Illinois Rep. Rahm Emanuel said.

"While astonishing and disappointing, this news should not come as a surprise. The Bush White House has consistently and deliberately withheld and underestimated numbers when it is politically convenient," said House Minority Whip Steny Hoyer (search), D-Md.

"The upshot of this most recent revelation is that the president's credibility is in tatters when it comes to cost estimates ... Moreover, this episode calls into question the president's alarmist rhetoric that Social Security (search) is going bankrupt," he added.

House Minority Leader Nancy Pelosi, D-Calif., suggested that Congress hold oversight hearings on the program and reopen legislation to hold down costs while increasing benefits.

"The Bush administration misrepresented to the Congress and the American people the true cost of the bill, which we now find out will cost a staggering $1.2 trillion. That is three times more than the administration claimed when Congress voted on it. For that price, seniors should have at least gotten a real prescription drug benefit, rather than the paltry benefits in the Republican bill," Pelosi said, adding that drug re-importation should be permitted.

Republicans too suggested that the price tag was over the top.

"I do think we are going to have to go back and re-address it," said Sen. Judd Gregg, R-N.H., the new budget panel chairman.

A hike was expected, "but not that much," said Sen. Jeff Sessions, R-Ala.

But one Senate Democrat said he understood the uptick in the numbers.

"We're taking a harder look at it. The preliminary estimate is that there is no change in estimates, it's just a date shift. The earlier estimates took account in, I think, 2004 and 2005, we're now in 2005. So if you look at the 10-year, it just shifted and everyone knew since the plan doesn't go into effect until 2006, and later years it's getting more expensive, the number would be higher," said Sen. Max Baucus, D-Mont.

Controversy over cost has plagued the program since before its passage. The administration's Medicare chief pressured a subordinate to withhold his higher estimates of the cost of the legislation from Congress, a report by the Department of Health and Human Services inspector general concluded. On top of the political elements, drug costs are rising faster than inflation and could tack on additional expenses later.

The new estimate shows that the program's costs are roughly $100 billion per year in 2014 and 2015, more than a third of what the bill was projected to cost in its first 10 years.

Under the new program, participants will pay monthly premiums that are expected to average $35 in 2006 and the first $250 in drug costs. Medicare will pick up 75 percent of the next $2,000 in prescription expenses. After that, a gap is built into coverage during which participants are responsible for the entire drug bills until costs top $5,100, after which the government pays 95 percent.

In terms of the overall budget presented by Bolten on Wednesday, Sen. Kent Conrad, D-N.D., ranking member of the Budget Committee, accused the Bush administration of creating "a political document that fundamentally misleads people."

"I don't even know what to say to you in terms of how seriously this misleads the American people," he said. "You've got a presentation here that I don't think reflects reality."

The Associated Press contributed to this report.