By Amy Goldstein and Juliet Eilperin
Washington Post Staff Writers
Friday, January 30, 2004; Page A01
The White House has concluded that adding prescription drug benefits to Medicare will cost one-third more than the $400 billion advertised by Congress and the administration when President Bush signed the bill into law less than two months ago, federal sources said yesterday.
The budget Bush is to propose on Monday will say that the new Medicare law, which sets in motion the largest expansion of the program in its history, will require $534 billion in the next decade, $134 billion more than the president and lawmakers said, according to congressional and administration sources.
Word of the escalation in the spending forecast immediately enraged lawmakers and policy analysts at both ends of the ideological spectrum. Congressional Democrats and conservative Republicans alike vowed that they would intensify efforts they already had been planning to alter major aspects of the Medicare law this year. "This is a work in progress," said Rep. Jack Kingston (R-Ga.), a conservative who voted for the law.
Administration officials would not explain the precise reason for the discrepancy. White House spokesman Trent Duffy said putting a price tag on Medicare "is a terrifically difficult area to try to predict" that hinges on "any number of unknowns," including how many older Americans buy the drug coverage, how much pharmaceutical prices rise and how many people on Medicare switch to private health plans, as the law encourages.
"The bottom line is, President Bush made a commitment to give seniors a prescription drug benefit and modernize Medicare, and he's delivered," Duffy said.
Bush aides and outside health policy specialists said it is common for congressional and White House budget advisers to come up with different cost forecasts on a range of major government expenditures. Outside analysts said yesterday that one possible reason for this difference involves long-standing disagreements over how rapidly Medicare's overall costs will rise.
For decades, cost predictions for major changes to Medicare and other government health programs have often proved highly inaccurate -- usually too low. Even so, lawmakers and health policy analysts said the size and swiftness of the increase in the White House forecast were striking. "I'm not sure I've ever heard of such a big discrepancy . . . weeks after legislation is passed," said Gail R. Wilensky, a Republican health economist who ran the Medicare program in the first Bush administration. "If people thought they were voting for a $400 billion budget, it's distressing."
News of the White House's conclusion came three days after the Congressional Budget Office, which supplies the official spending estimates on which lawmakers rely, reaffirmed its forecast that the Medicare law will cost $395 billion over the next 10 years. During the many months that the Medicare bill was pending in Congress, the Bush administration never provided its own overall spending estimate, preferring to rely on the CBO figures. Now, it will take years to establish which prediction is more accurate, particularly because the drug benefit is not scheduled to start until 2006.
After years of debate, Congress late last year adopted fundamental revisions to Medicare, the 1960s-era program that provides health coverage to 40 million elderly and disabled Americans. In addition to creating the federal subsidies for prescription drugs, the law is designed to tilt the program heavily toward the private sector.
In both the House and the Senate, the vote margins were narrow; the House bill passed only after the chamber's GOP leaders held open the roll call for an unprecedented three hours before dawn while they scrounged for a few more votes.
Most Democrats argued that the law would provide skimpy drug assistance, make too little effort to constrain drug prices, and provide a financial boon to pharmaceutical manufacturers and private health plans. A significant faction of House conservatives, some of whom voted for the bill under duress, complained about the large expansion of one of the country's main entitlement programs, particularly at a time of record budget deficits.
Yesterday, both sides were furious.
"It's almost like shooting fish in a barrel to say 'We told you so,' " said Robert Moffitt, director of health policy studies at the Heritage Foundation, a conservative think tank that opposed the legislation on the grounds that it was unaffordable.
"All of us were afraid it was going to be greater than the estimate," said Rep. Mac Collins (R-Ga.), who said that he and other conservatives had felt pressured to support the bill, knowing that Bush was eager to sign it. "It's unfortunate that Congress was put in the position of dealing with a bill that was going to be very expensive, going to be an entitlement and was going to make it into law."
Collins said the White House figures could stiffen conservatives' resolve to impose unprecedented spending limits on the program. In a compromise, the law does not impose a hard limit on Medicare spending but would require the White House to alert Congress if expenditures rose above specified levels. "I hope Congress has enough backbone" to impose such a cap, Collins said.
Democrats were critical for different reasons.
"Not any senior has seen any assistance, yet we've just slugged the taxpayers for another $140 billion," said Rep. Rahm Emanuel (D-Ill.), who fought unsuccessfully for provisions designed to reduce drug prices.
Sen. Edward M. Kennedy (D-Mass.), said, "The ballooning cost of the program underlines the need to end the sweetheart deals [for drug companies] and to provide the government the authority to negotiate reasonable prescription drug prices for senior citizens under Medicare."
Some congressional Republicans sought to quell the controversy, echoing the White House's view that budget forecasting for Medicare is inherently difficult. "I just don't think the bill is going to be repealed or changed radically," one Senate GOP aide said.
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