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Correction to This Article
A Feb. 10 article on Medicare costs misspelled the first name of Rep. Zach Wamp (R- Tenn.).

Democrats Call for Medicare Drug Inquiry

By Charles Babington and Ceci Connolly
Washington Post Staff Writers
Thursday, February 10, 2005; Page A02

Democratic lawmakers seized on news yesterday that the Medicare prescription drug benefit will cost much more than first projected, blasting the Bush administration and saying it cannot be trusted to acknowledge the likely costs of its priorities, including revisions to Social Security.

In hearings, speeches and interviews, Democrats said the sharply higher Medicare cost estimate is a matter of credibility, not bookkeeping quibbles, and they wielded it as a new weapon in their bid to prevent President Bush from converting a portion of Social Security payroll taxes to personal accounts. Some House and Senate Democrats called for a congressional investigation into the hard-fought 2003 Medicare prescription drug battle, in which an administration official said he was pressured to keep long-term cost estimates hidden from lawmakers.

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The White House defended its actions, disputing news reports that the drug benefit's 10-year cost would be $1.2 trillion and stressing that the actual net cost to the government after factoring in savings would be about $724 billion. Throughout the 2003 debate, supporters estimated the cost at $400 billion over 10 years.

But several GOP lawmakers said the higher estimates -- regardless of which calculation one accepts -- come at a bad time politically, just days after Bush presented his budget for fiscal 2006 and began his campaign to change Social Security.

"I think this is a problem as we're trying to get our arms around the budget deficit," said Rep. Zack Wamp (R-Tenn.). "This is bad news in the middle of our stated plans." Rep. Mike Pence (R-Ind.), a leader of House conservatives, said: "There's a lot of sticker shock in the Republican majority over Medicare this week."

Democrats fired away. "I'm shocked and dismayed . . . that the Medicare prescription drug benefit will now cost anywhere from $720 billion to $1.2 trillion over 10 years," said Sen. Dianne Feinstein (Calif.). "I believe the Senate Finance Committee should investigate the process used to estimate the cost of this bill."

House Minority Whip Steny H. Hoyer (Md.) said: "The president's credibility is in tatters when it comes to cost estimates. Just this week, the White House offered a fraudulent budget that ignored the costs of privatizing Social Security, funding our war effort in Iraq and fixing the alternative minimum tax." Sen. John F. Kerry (Mass.) said, "If the numbers don't add up for Medicare, how can we be sure they will add up for Social Security?"

For the second day, administration officials sought to quell the criticism, producing a new chart to explain the costs of the drug benefit, which will take effect next year. The administration projects the package will cost $1.2 trillion over the next decade. But after factoring in premium payments from beneficiaries and reduced costs in the Medicaid health program for the poor, the price tag would be $724 billion, said Mark B. McClellan, head of the Centers for Medicare and Medicaid Services.

"Our original estimates for 2004 to 2013 have not changed significantly," he said in a telephone briefing. The new figures cover "a 10-year window that now includes 2014 and 2015," he said, when more seniors will be covered for more and higher-priced drugs.

McClellan said his staff prepared the chart to give reporters an "apples to apples" comparison of the impact of the Medicare drug benefit on total federal spending. Typical budget charts would not reflect anticipated Medicaid savings.

"It is unusual to re-price an original cost estimate," said Douglas Holtz-Eakin, head of the Congressional Budget Office. "It's the first time I've seen it." But he said the administration's numbers were "plausible."

Bush briefly addressed the debate, saying, "There's no question that there is an unfunded liability inherent in Medicare that Congress and the administration is going to have to deal with over time."

The legislative battle over Medicare drug coverage ended in a controversial pre-dawn House vote on Nov. 22, 2003, when GOP leaders extended the roll call for nearly three hours to twist enough arms to pass the measure. The White House and its allies repeatedly said the 10-year cost -- from 2004 to 2013 -- would be about $400 billion.

Soon after the bill's passage, the White House revised its projection to $534 billion. Last March, Richard S. Foster, Medicare's chief actuary, said administration officials had threatened to fire him if he disclosed his belief in 2003 that the drug benefit would cost as much as $600 billion.

"An ethical cloud has hung over the Republican Medicare law since it was passed in the dark of night more than a year ago," House Minority Leader Nancy Pelosi (D-Calif.) said yesterday. "Congress must have oversight hearings on the Republican Medicare prescription drug law and reopen it to hold down costs."

While GOP lawmakers did not challenge the administration's figures yesterday, some said Congress should reconsider the drug benefit. Wamp and Pence -- who voted against the bill in 2003 -- said high-income people should not fully qualify for the benefit. Senate Budget Chairman Judd Gregg (R-N.H.) favors reexamining the program.

Other lawmakers renewed their calls for allowing the importation of U.S.-approved drugs from foreign countries, and for allowing the federal government to negotiate costs with drugmakers.

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