Bush will offer his new proposal that will usher the nation's 40 million Medicare beneficiaries into one of three types of plans before the American Medical Association in Washington. Senior administration officials said Congress would be left to hammer out the details of the plan such as the level of prescription drug coverage.
The Bush administration has estimated 77 million Americans would be in Medicare by 2030. It also estimated the fund for hospital insurance -- the Part A Trust Fund -- will face cash-flow deficits beginning in 2016, and Medicare's fund for its other benefits under Part B, which includes doctor visits and other non-hospital healthcare costs, likely would require a doubling of its premiums to remain solvent over the next 10 years.
Bush wants to set aside $400 billion over 10 years for the reforms. Democrats have balked at the prospect of tampering with Medicare and have vowed to preserve the entitlement program.
House Democrats are set Tuesday to roll out their own prescription drug plan. They criticized the Bush plan as a proposal that does not adequately protect seniors who choose to stay in the traditional Medicare plan.
Under the president's new proposal, seniors would have the choice to remain in the traditional fee-for-service Medicare plan that requires beneficiaries to pay a deductible and places a cap on hospital stays.
A second tier, enhanced Medicare would offer seniors a choice of multiple healthcare plans with full coverage of preventive care. A third option would place seniors in a managed care plan.
Seniors opting for enhanced or managed care plans would receive more expansive drug coverage.
The changes would become effective in January 2006, senior administration officials said.
The White House said seniors would receive more immediate help with the skyrocketing costs of prescription drugs in the form of a drug discount card that would provide savings between 10 percent and 25 percent. Low-income seniors would receive a $600 in drug assistance loaded on a debit card.
Last year, the U.S. Senate could not agree on what a prescription drug benefit for seniors should looks like. The Senate failed to compromise on bills featuring provisions ranging from a government-sponsored plan to a proposal that would place administration of Medicare drug coverage in the hands of private insurers.
Under a Republican-backed plan seniors would have paid a $25 annual fee to participate, as well as a small co-payment for prescriptions after they reach their out-of-pocket limit. The $25 fee would have been waived for all beneficiaries with incomes less than 200 percent of the federal poverty level. The measure would have cost $160 billion over 10 years.
A Democratic version estimated to cost $594 billion over 10 years favored a government-administered plan requiring a $25 monthly premium payment, a $10 co-payment for generic drugs and $40 for brand-name drugs, with a $4,000 cap on out-of-pocket expenses.
A third bill crafted by Republicans and supported by a bipartisan coalition of Senate lawmakers offered a government-administered plan on drug subsidies for low-income beneficiaries was rejected 48-51, 12 votes shy of the 60 needed for approval. The bill, estimated to cost some $340 billion, would have provided coverage through private companies.
The U.S. House of Representatives last year passed a $320 billion Medicare prescription drug bill. The House version, which the White House has praised, would have provided $320 billion over 10 years for a prescription drug benefit for Medicare recipients. Private insurance companies would have administered the plan. The federal government would have paid 80 percent of the next $1,000 of drug expenses and half of the next $1,000.