CLINTON PLAN WOULD EXTEND; MEDICARE, EXPAND OPTIONS.

Byline: Jodi Enda and David Hess Knight Ridder Newspapers

President Clinton on Tuesday proposed a far-reaching plan to extend the life of Medicare well into the next century and to dramatically expand benefits by offering senior citizens free preventive care and an option to buy coverage for prescription drugs.

``It's the right thing to do for our parents and our grandparents,'' Clinton said. ``It's the right thing to do for the children of this country. It is the right thing to do so that when we need it, the burden of our health care cost does not fall on the children and hurt their ability to raise our grandchildren.''

The president's proposal represents one of the most ambitious attempts to reform the senior citizens' health insurance program since President Lyndon B. Johnson signed it into law in 1965. It also is Clinton's biggest foray into the world of health care reform since his mammoth plan to revamp the nation's entire medical delivery system went down in flames five years ago.

In his fourth major domestic-policy appearance since Friday, Clinton reached out to Congress to take advantage of the flush economic times and the ever-narrowing window before next year's presidential and congressional elections to pass what he deemed to be needed reforms.

Even before the president could unveil his plan, Republican leaders attacked it as too expensive and unnecessarily broad. But faced with a prescription-drug proposal that is expected to generate considerable public support, the GOP dismissed nothing out of hand.

``We want to see an America in which every senior has the best possible health care, including access to affordable prescription drugs as part of an integrated health program,'' Senate Majority Leader Trent Lott of Mississippi and House Speaker Dennis Hastert of Illinois said in a joint statement.

Their comments signaled the possibility that a much-anticipated budget brawl, in which Republicans will push for tax cuts while Clinton presses to pay down the national debt and shore up Social Security and Medicare, can end in a compromise that puts both parties in a positive light as they head toward elections.

The president announced Monday that he wanted to use $794 billion of a larger-than-expected federal surplus to extend the life of Medicare to 2027. ``But,'' he said during an address Tuesday in the White House East Room, ``securing Medicare is not enough.''

After 35 years as an essential part of the lives of 39 million senior citizens, Medicare must be modernized to reflect many of the medical breakthroughs that have taken place since its inception, Clinton said. He pointed specifically to the increased reliance on medication and preventive care to avoid surgery.

Under the president's prescription-drug plan, senior citizens could choose to pay $24 a month, starting in 2002, for a benefit intended to cover half their prescription-drug costs. Initially, Medicare would pay up to $1,000 a year for medications - half a $2,000 annual bill. Gradually, Medicare payments would increase to a maximum of $2,500 in 2008, when the monthly premium would rise to $44.

Administration officials said they also would allow Medicare to benefit from the same kind of bulk-buying discounts that private insurers receive, a change they predicted would reduce the price of medication some 10 percent.

``Nobody would devise a Medicare program today, if we were starting all over, without including a prescription-drug benefit,'' Clinton said. ``There is a good reason for this. We all know that these prescription drugs both save lives and improve the quality of life, yet Medicare currently lacks a drug benefit.

``That is a major problem for millions and millions of seniors, and not just those with low incomes,'' he said. ``Of the 15 million Medicare beneficiaries who lack prescription-drug benefits today, nearly half are middle-class Americans. And with prescription-drug prices rising, fewer and fewer retirees are getting drug coverage through their former employers' health programs.''

The new prescription-drug benefit would cost the federal government $118 billion over 10 years, according to administration figures.

Although a number of Congress members said the prescription plan should be available only to the most needy seniors, the White House rejected that proposal. Instead, it decided to eliminate the monthly premium to individuals who earn less than $11,000 a year and couples who earn less than $17,000 annually. Other low-income Medicare recipients would receive subsidies to help offset the premiums.

The American Association of Retired Persons hailed the prescription-drug plan. ``That's a major step forward that could help a lot of people with substantial costs,'' said lobbyist Tricia Smith.

The plan is unlikely to survive Congress without major changes, and the prescription-drug benefit is an obvious area for compromise. House Majority Leader Dick Armey, R-Texas, said there was no need to offer the coverage to the two-thirds of senior citizens who have prescription benefits through private insurance.

``We want to focus our concern and concentrate our interests on those that do not have available coverage now,'' he said. ``If you've got 31 percent of the people with the problem, you ought to put together a 31 percent solution, not necessarily a 100 percent solution.''

But Gene Sperling, Clinton's domestic policy adviser, said the prescription-drug premiums offered by the administration's plan would be as much as 50 percent less than those charged by private insurers who provide so-called ``Medigap'' coverage. And the AARP's Smith said Medigap coverage is both ``expensive and limited,'' leaving many seniors with monthly medication bills of $200 to $400.

But even some Democrats questioned the notion that coverage for medicine should be offered to everyone.

``It's almost irresistible politically,'' said Sen. Bob Kerrey, D-Neb. ``But it's also costly, and I'm not sure how we can pay for it.''

Benefits and costs

President Clinton's proposed Medicare changes include:

A new prescription-drug benefit, available as an option starting in 2002. Medicare does not currently cover drugs not administered in hospitals or doctors' offices.

Coverage would start with the first dollar of prescription costs, with no deductible. The government would pay half the first $2,000 of drug costs in a year. Costs above $2,000 would have to be paid by the beneficiary. The monthly premium would rise gradually, reaching $44 in 2008 and the $2,000 cap would rise to $5,000. Estimated cost: $118 billion over the next 10 years.

Elimination of all co-payments and deductibles for preventive medical care including mammograms, prostate cancer screenings and diabetes management. Estimated cost: $3 billion over 10 years.

A new 20 percent co-payment for lab tests for which beneficiaries currently pay no out-of-pocket fees, and inflation indexing of the $100 annual Medicare deductible for doctor's office visits and other outpatient treatments. The inflation indexing likely would result in deductible increases of $2 to $3 a year. Estimated savings: $11 billion over 10 years.

Beneficiaries who opt to join private managed care health plans that participate in Medicare would share in any savings if the plans were more efficient than average - or extra expense if they were less efficient. Monthly Medicare premiums would be lower for those who chose plans that were less expensive. Those who chose more expensive plans would pay the difference. Estimated savings: $8 billion over 10 years.

Most curbs on payments to health care providers that were set in motion by Congress in 1997 as part of a plan to balance the federal budget would be extended for an additional decade in order to achieve an additional $39 billion in savings. However, a $7.5 billion fund would be established so that adjustments would be made if it was determined that some cuts were hurting patient care.

Medicare administrators would get new authority to replace some government price formulas now used in purchasing goods and services, such as medical equipment, with competitive contracting. Estimated savings: $25 billion over 10 years.

$794 billion in expected government surpluses would be dedicated to Medicare over the next 15 years.

- Associated Press 

CAPTION(S):

box

Box: Benefits and costs (see text)