The House and Senate have passed different versions of a huge prescription drug benefit for Medicare, and those bills are now in conference, with a tough political fight ahead and no certainty of a compromise. Panelists at a July 15 AEI event outlined the differences in the House and Senate bills and discussed the looming political battles and possible outcomes.

While the bills have significant similarities, including price tags of around $400 billion over ten years, reliance on private companies to deliver the drug benefit that would start in 2006, and increased Medicare payments in rural areas, these features have been overshadowed by the bill's differences. The most significant point of contention is the introduction of competition between Medicare's traditional fee-for-service plan and private health plans in the House bill.

Democrats worry about the impact of such competition. AEI scholar Joseph Antos commented, "The House bill is characterized as privatizing Medicare and has been characterized, at least in the popular press, as something that could destroy traditional Medicare and displace literally millions of Medicare beneficiaries, but, in fact, the House bill really represents some baby steps towards competition."

Under the House plan, competition would be introduced in some metropolitan areas. "That doesn't mean that traditional Medicare will suddenly look like a terrible plan to most people," Antos said. "In fact, for the first time, it will be, I believe, a reasonably fair test of the proposition that traditional Medicare actually does a better job of controlling costs than private plans."

AEI scholar Norman J. Ornstein discussed the political process that led to these bills. "My assumption all along from the beginning of this congress was that we would get a prescription drug bill enacted into law, that it seemed to be almost a perfect storm politically to make that happen." The GOP has been attempting to defuse this issue, which "has been at the top of the wish list for the Democrats for a very long period of time." Yet Ornstein said, "I have now, having seen a very strange process emerge, come to the conclusion that the odds are probably greater that . . . we will get no law enacted this year."

Ornstein described three possibilities for the benefit, "One is the conference committee just simply gridlocks. The Senate conferees and the House conferees each draw their lines, neither willing . . . to budge and the whole thing dies." The second possibility is a compromise, which would likely mean accepting the essence of the Senate bill and then requiring the House leaders to abandon the most conservative members of the House and rely on mainstream Democrats. The third is that the House and White House pressure the Senate conferees to bring up the House bill, "with all of the damage that would be caused along the way to whatever remains of bipartisanship here, and dare the Senate Democrats to kill the bill or filibuster the bill."

Predicting a "difficult and dicey conference," Gail Wilensky, senior fellow at Project Hope, commented, "There is going to be, I believe, a great reluctance by the conservatives in the House to give up the issues that they think are so important. . . . It is possible by fundamentally making this change to Medicare to both change the kind of health plans that are available to seniors and to begin to impact at the margin the growth rate in spending that is associated with Medicare, a very important attribute. It is my hope that the conservatives in the House mean what they say: that these were deal breakers from their point of view."

Apprehensive of the chances for a prescription drug benefit to pass, Ornstein concluded, "In the end, whether any of these excuses for a benefit that an awful lot of people have been waiting for . . . will matter if they don't get it at all is going to be another interesting element of the politics that will carry forward into the 2004 campaign."