Medicare Compliance & Reimbursement

Part D delay called 'a non-starter' by opponents.

Despite calls by several key fiscal conservatives in Congress to delay Medicare Part D, many legislators and the White House strongly oppose reducing the new Medicare prescription drug benefit to help fund Katrina health care relief.

Congressmen are scrambling to find ways to underwrite the massive reconstruction and relief bill for Hurricane Katrina. Estimates for the legislation put the bill in excess of $200 billion. As an alternative to higher deficit spending, many in Washington are eyeing reductions in costly federal programs as a source of funding.

One area legislators are exploring for funding cuts is the costly new Medicare drug entitlement scheduled to go into effect on Jan. 1, 2006. Sen. John McCain (R-AZ) said that, in light of Katrina, American taxpayers cannot afford "this massive and unnecessary Medicare entitlement expansion" next year. "There's no such thing as a free lunch," McCain told reporters at a briefing. "It's time we started making some sacrifices."

Members of the House Republican Study Committee have proposed a one-year delay of the benefit to offset rapidly rising Katrina-related costs. The RSC policy ...quot; embodied in The Prescription Drug Cost Containment Act of 2005 (H.R. 1382), authored by Rep. Jeff Flake (R-AZ)--claims that the delay will save $40 billion.

Title I of the Medicare Modernization Act is projected to cost $37.4 billion in 2006 and $52.5 billion in 2007 alone. Moreover, according to the Medicare Trustees, the Act's universal entitlement to prescription drugs within Medicare will add $8.7 trillion to Medicare's long-term total unfunded liabilities--or nearly 30 percent of Medicare's total $29.7-trillion long-term debt.

Fiscal Conservatives Strike At Benefit

The conservative think-tank Heritage Foundation issued a position paper Sept. 22 ("Paying for Katrina Relief: Cancel or Delay the Medicare Drug Benefit") supporting the Medicare prescription drug benefit delay. The report said that the "costly universal benefit is unnecessary," citing the fact that roughly three-quarters of senior citizens already have some form of drug coverage, either through former employers and private insurance or through Medicaid.

With mid-term elections looming, political considerations make Part D reductions unlikely, however. Rep. Tom DeLay (R-TX), who was still the Majority Leader at the time of his comments, called a delay proposed in the House by Rep. Mike Pence (R-IN), "a non-starter."

The Bush administration is likewise in no mood to cave in to legislative pressures to withhold the drug benefit, a highlight of the President's domestic policy achievements in his first term.