Cost estimates fuel debate over Medicare drugs

WASHINGTON -- Newly released cost estimates for the Medicare prescription drug program are emboldening Democrats and Republicans to push for significant changes in the program before it takes effect in 2006, presenting challenges to one of President Bush's signature programs at a time when he is trying to garner support for his proposal to remake Social Security.

A group of Republican House members is seeking to exclude higher-income senior citizens from the benefit, to bring down the costs borne by the federal government. Separate bipartisan coalitions of lawmakers said they hope the higher cost estimate will help efforts to legalize the importation of cheaper medications from Canada and force Medicare administrators to bargain with drug companies for lower prices.

In addition, several Republican senators expressed support yesterday for placing a cap on spending for the new program. Such a move would force the Bush administration to limit eligibility, raise copayments, or find other cost savings in the program it championed in 2003.

Senator Jeff Sessions, an Alabama Republican who serves on the Senate Budget Committee, said costs should be brought under control before senior citizens start depending on the drug benefit, which takes effect for most seniors next January.

He said the bill would have lost many votes, possibly including his own, if the true cost was known at the time to be in excess of $700 billion. It was originally estimated to cost less than $400 billion.

"When it gets much over $500 billion, we're at a point where it's a crisis that needs to be confronted now," Sessions said. "Anything should be on the board, as far as I'm concerned, to keep the costs of this huge new expenditure within the realm of what was committed."

The White House reported this week that it expects the drug benefit to cost $724 billion in its first decade in operation, assuming that cost savings by shifting Medicaid recipients to Medicare and higher Medicare premiums come through. Without those two elements, the program's 10-year cost could be as high as $1.19 trillion, according to budget documents.

The administration contends that nearly all of the increased costs are related to the fact that earlier 10-year estimates included the phase-in years -- when costs are lower -- of 2004 and 2005, while the new 10-year estimates begin with 2006, the first year the program is fully in effect.

The White House budget chief, Joshua B. Bolten, told the Senate Budget Committee that the latest cost estimates are "completely consistent with the numbers the administration has produced before."

Many Republicans with close ties to the White House expressed concern about the escalating costs. Judd Gregg, chairman of the Senate Budget Committee, reiterated his concerns about the costs. He has also said he would like to find a way to cap costs for Medicare prescription drugs.

"I am still very suspect of this program as to its cost, and certainly want to know what the real numbers are and look forward to getting more specifics," said Gregg, Republican of New Hampshire. "I do think we are going to have to go back and readdress it."

Later in the day, he issued a statement saying that he is not yet sure that "hard evidence" exists that the program will cost significantly more than original estimates, but said he fears the program amounts to "a massive tax increase on future generations."

Bush showed no signs yesterday that he is willing to reopen the issue of Medicare prescription drugs when Social Security tops his agenda. The president said that Medicare needs to be addressed "over time," but said he wants to see the drug benefit take effect before lawmakers come back to it.

The measure's original expected cost of $400 billion was revised to $534 billion shortly after the law was passed. According to a report by the Health and Human Services Department's inspector general, the administration's Medicare chief pressured a lower-ranking official to withhold the higher cost estimate from Congress.

The vote on the bill was close in the House. The legislation carried by five votes after House leaders kept a roll call open for three hours so they could persuade skeptical lawmakers to vote yes. The bill passed in the Senate, 54 to 44.

The most recent revision revealed Republicans' reservations anew. Senator Richard G. Lugar, Republican of Indiana, said he is not sure the latest estimate is accurate. "I noted the estimate without having any better idea of the reality," he said.

The libertarian Cato Institute released a report yesterday saying that the newly revised cost could severely underestimate the actual costs, because savings presumed by the White House may not come through.

The questions over the true cost of the measure are coming at a delicate time for Bush, as he travels the country to drum up support for his proposal to partially privatize Social Security for younger workers.

Charles E. Grassley, chairman of the Senate Finance Committee, reiterated his support yesterday for the Medicare expansion, but warned that Bush must engage in significant salesmanship of his Social Security program for the latter to pass Congress. He estimated that the president has about 90 days to bring about a groundswell in favor of his overhauls, or risks losing momentum and seeing a key priority scuttled.

"I don't think we can move until there's opinion coming in here from the grass roots of America that we shouldn't just be concerned about grandma; we ought to be concerned about grandkids," said Grassley, Republican of Iowa.

Democrats pounced on the latest revision to the Medicare cost estimate, saying it calls into question the numbers Bush uses to tout his Social Security plan and his budget. Democrats say Bush's 10-year, $754 billion Social Security cost estimate understates the costs of privatization and that his budget inaccurately asserts that he would cut the deficit in half within five years, because it ignores major tax cuts and spending programs.

"The president's credibility is in tatters when it comes to cost estimates," said Representative Steny H. Hoyer of Maryland, the House minority whip. "The Bush White House has consistently and deliberately withheld and underestimated numbers when it is politically convenient."

Democrats and Republicans used the new cost numbers to tout other methods of controlling drug costs. Senator John McCain, an Arizona Republican who voted against the Medicare drug program two years ago, said Congress must consider capping the program's funding and making it applicable only to lower-income seniors.

McCain joined several colleagues yesterday in introducing a bill that would legalize the importation of prescription drugs from Canada. The national Canadian healthcare system makes medications available at lower prices than those available in the United States, because of the bargaining power of a central purchasing entity.

Senator Edward M. Kennedy, who is cosponsoring the bill to allow reimportation from Canada, said the bill would cut costs for individual consumers and the federal government.

The Massachusetts Democrat said, "The problem is not caused by [the administration drug plan] being too generous toward seniors. In fact, it is not generous enough. Too much of the cost of the program goes to increase the drug industry's already inflated profits."

Rick Klein can be reached at rklein@globe.com.