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Medicare Drug Benefit May Cost $1.2 Trillion

Administration accountants have factored in new premium payments by beneficiaries, which will lower the program's overall cost. Moreover, McClellan said, some seniors will be shifted from Medicaid to Medicare, resulting in about $190 billion in savings over the next decade. That is because states will be required to reimburse the federal government for some of those services, and the federal government will not be required to pay out as much in matching funds to states.

The new budget projections also show that seniors will face higher bills each year. A 10-year chart prepared by the Medicare actuaries estimates the drug premium will rise from $35 a month next year to $68 in 2015. Annual deductibles will start at $250 in 2006 and rise to about $472 in 2015, and the maximum annual out-of-pocket expense would be $6,800 that year.

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Meanwhile, administration officials struggled to defend Bush's Social Security and budget plans, which Democrats attacked as fiscally deceptive in day-long hearings on Capitol Hill.

During his testimony, Snow was asked by Rep. Lloyd Doggett (D-Tex.) how the administration could describe Social Security as headed for bankruptcy when many private companies have pension plans for which they cannot currently meet all their obligations.

Bush said in his State of the Union address last week that unless Congress acts now to restructure Social Security and create individual investment accounts for younger workers, the system will "be exhausted and bankrupt" by 2042.

Snow acknowledged that "there is a major difference between not being fully funded and being bankrupt." But he said Social Security is "doomed by our country's demographics" and "is offering empty promises to future generations."

Democrats pointed to the discrepancy in Medicare cost projections as further reason to distrust Bush's 2006 budget, which they said uses tricks and omissions to paint a rosier fiscal picture than the facts justify.

Republicans had expected their opponents to focus on the 150 major cuts to programs in the president's budget, although the White House has so far declined to release a complete list. Instead, Democrats used their time to build a case that Bush is portraying Social Security as worse off than it really is, as a way to build support for personal accounts, and at the same time is trying to make the trend in deficits look better than it is.

Testifying at the same time as Snow, White House budget director Joshua B. Bolten acknowledged that "the private accounts, the personal accounts, do not, in themselves, solve the full Social Security problem."

"Other reforms will need to be made," he said.

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