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Executive Summary

MEDICAID INCREASED COVERAGE IN LIEU OF MEDICARE DRUG BENEFIT is being pushed by 30 Republicans led by Reps. Rhodes (Ariz.), Madigan (Ill.) and Bilirakis (Fla.). The Republicans unveiled their effort to forestall the implementation of the Medicare outpatient drug benefit at an April 18 press conference on Capitol Hill. The proposal is embodied in a new bill (HR 2055). The Medicare drug program, created as part of the Catastrophic Health Care Act of 1988, is scheduled for full implementation on Jan. 1, 1991. The Republican alternative program would mandate that Medicaid cover prescription drugs for an elderly Medicare beneficiary whose income is below 150% of federal poverty levels. Reimbursement would become available after a beneficiary exceeded a $50 deductible. The Medicare program, for all beneficiaries regardless of income, has a much higher, $600, deductible level. The sponsors of the Medicaid bill describe it as a legislative effort to refocus Medicare catastrophic health care events and to respond to constituent complaints about the cost of the new Medicare law. Drug coverage was added to Medicare under the argument that the costs of chronic drug therapy for many of the elderly represent a catastrophic economic event. The new Republican bill is very similar to a proposal supported by 190 Republicans during the catastrophic health care debate last year. That proposal, which had some sympathetic Democratic support at the beginning of 1988, was never a real factor in the final legislative wrangling. The Democratic majority leaders quickly decided on the extension of prescription drug coverage to the Medicare program as a major issue for the election year. The Republicans hope to resurrect the Medicaid plan based on the signs of concern over increases in the Medicare premiums. The current strength of those pressures was reflected by the 97-2 vote for a resolution in the Senate in mid-April to call for renewed hearings on the catastrophic care plan. Senate Finance Committee Chairman Bentsen (D-Texas) commented on the pressure to review the new law at a press conference on April 20. A Capitol Hill movement to undo the Medicare extension, however, will have to overcome the initial objections of key Bush Administration officials. For example, Office of Management & Budget Director Richard Darman recently testified to a House committee that he did not believe the Catastrophic Care Act should be "reopened" ("The Pink Sheet" March 27, T&G-1).

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