Every elderly American would be able to get federal help in buying medicine under a proposal to be presented today by President Clinton that would charge Medicare patients $24 a month for a new prescription drug benefit.
According to administration officials and other sources familiar with the plan, the White House will call for Medicare to start picking up half the cost of prescription drugs, up to $2,000 worth of medicine a year, when the new benefit begins in 2002. Over the following six years, patients' monthly premiums would increase to $44, while the yearly limit on the drug costs to be shared by the government would rise to $5,000.
Through such an approach, the administration's plan would offer relatively modest help to all Medicare patients, rather than focusing assistance on those who need it the most. It seeks to make a certain amount of medicine more affordable for all 39 million elderly and disabled Americans who receive health insurance through the nation's second-largest entitlement program.
But the White House also is drawing a political dividing line with many Republicans and some members of the influential health care industry, who believe that the government should help defray the cost of medicine only for elderly patients who lack prescription drug coverage or who run up extraordinarily large pharmaceutical bills.
While their methods vary, politicians of both parties have latched onto the idea of helping Medicare patients pay for drugs, an idea that polls suggest enjoys wide public support. Currently, an estimated one-third to one-half of Americans 65 and older pay the entire cost of their medicine. Many of them find that burden particularly difficult because the typical older American relies on 18 prescriptions a year and because pharmaceuticals expenses represent the fastest-growing facet of U.S. health care costs.
The prescription drug benefit is the centerpiece of a proposal the White House has been developing for months that is aimed at modernizing the 1960s-era Medicare system while trying to shore up the program to withstand the enormous economic burdens it will confront in slightly more than a decade, once the large baby boom generation begins to retire.
Parts of the proposal, to be released this afternoon at a Rose Garden ceremony, will be familiar. The president will, for example, renew the call he first made last January to devote 15 percent of expected budget surpluses over the next 15 years -- about $700 billion -- to help keep the Medicare program solvent. Yesterday, while announcing an even larger budget surplus than had been anticipated, the White House said it would use an extra $94 billion for Medicare, primarily to pay for the drug benefit.
While details remained sketchy yesterday, the Medicare proposal also will call for measures to promote cost savings. They include several efforts to promote marketplace competition in both the traditional "fee-for-service" version of the program and among private health maintenance organizations in which a growing number of Medicare patients have enrolled.
But the White House has rejected other ways to save money, such as increasing the age at which people can join Medicare or charging more affluent patients more money for their care. Both those controversial ideas were considered -- and ultimatedly rejected -- by a high-level Medicare reform commission that ended a year of work this spring in a deadlock. The commission's leaders favored a drug benefit more limited than the one the administration has designed.
Th White House's version would represent one of the largest expansions of Medicare's scope in the history of the program. Until now it has helped older Americans pay for their hospital bills, doctors' visits and other expenses such as medical equipment and home health care. The drug benefit would be run by an entirely separate new wing of the program, which would be known as "Part D."
Certain details of Clinton's proposal still were being hashed out over the weekend and even yesterday, when the White House received an official budget analysis of its proposal from the agency that runs Medicare.
White House officials were so determined to try to keep details of its plan secret until today that they canceled their ritual of briefing key congressional staffers the night before announcing major policy initiatives.
But according to sources familiar with the proposal, Clinton will recommend that Medicare patients be allowed to choose whether to enroll in the drug benefit plan, but will not be able to drop in and out of it.
Sources said administration officials believe that virtually everyone will select it, because the monthly premium would be less than the typical $90 monthly price of private "Medigap" policies that some patients buy to augment Medicare. The plan, which would require congressional approval, will recommend that the government pay the monthly premium for Medicare patients with income less than 135 percent of the poverty level.
Even before the plan becomes public, it is attracting criticism. The health insurance industry warned yesterday that Clinton's approach would undermine elderly patients' interest in private HMOs, most of which offer drug benefits as an inducement. Meanwhile, Republicans on Capitol Hill contended that the plan might prompt employers to drop drug coverage from retirees' health benefits.
CAPTION: President Clinton with Treasury's Robert Rubin, right, and adviser Gene Sperling Monday after announcing higher surpluses.