Business vows to fight against drug-benefit delay

If the nascent movement by congressional conservatives to delay the rollout of prescription-drug coverage for Medicare beneficiaries begins to gain traction, K Street can be expected to put up a fight.

From the health-insurance industry to large employers to organized labor to groups representing older Americans, many powerful interests have spent millions of dollars on preparing for the drug benefit and would be loath to see that money go to waste if Congress moved to postpone the coverage.

In what is likely to be a sign of things to come, the U.S. Chamber of Commerce laid out its case against delaying the costly Medicare drug benefit in a letter that was expected to be sent to congressional leaders yesterday. In addition to pointing out the sizable investments already made, employers have factored the changes to Medicare into their business plans for next year.

The Centers for Medicare and Medicaid Services (CMS) expects that 10 million to 12 million of Medicare’s more than 40 million beneficiaries will receive their drug benefits through retiree health plans administered by their former employers. The legislation that created the drug benefit also established mechanisms for employers to combine their retiree benefit plans with Medicare, which would lower employer healthcare spending and might offer some retirees more comprehensive coverage.

A cadre of fiscal conservatives — led by House Republicans who opposed the Medicare drug benefit bill when it was enacted in 2003 — has recommended postponing the implementation of the Medicare drug benefit to help offset the cost of federal relief and reconstruction efforts being undertaken in response to Hurricane Katrina.

The White House and key congressional leaders have rejected the suggestion, and although lobbyists insist they aren’t truly worried that a delay will come to pass, they are looking over their shoulders.

A delay “would be absolute chaos for employers,” said Kate Sullivan Hare, executive director of the Chamber’s healthcare policy shop.

“It would be catastrophic,” said National Association of Manufacturers lobbyist Neil Trautwein.

The notion even has AARP and the drug industry using the same language. Halting implementation “would throw things into mass confusion,” said John Rother, AARP’s director of policy and strategy.

In a statement, Pharmaceutical Research and Manufacturers of America Senior Vice President Ken Johnson likewise said, “Postponing the start of the Medicare prescription-drug program would create mass confusion for seniors.”

“It is such a ludicrous idea,” Trautwein said. “We are so far down the road toward implementation.”

The mechanics of a delay would be extremely complicated — and time is running out. “In the next few days,” CMS will finalize its contracts with health insurers offering Medicare drug plans, said agency spokesman Gary Karr. Beginning Oct. 1, the health plans will begin their marketing campaigns. Beneficiaries will be able to choose a plan starting Nov. 15, and coverage will begin Jan. 1.

Nationwide campaigns are under way to educate Medicare beneficiaries about their options. CMS, the Social Security Administration and a smorgasbord of private interests have been working for months to prepare older Americans and the disabled for the launch of the drug benefit. President Bush has toured the country with other administration officials to attract attention to the new coverage.

For employers, the money already spent is only part of the problem. Their healthcare-cost projections for next year count on the money coming from Medicare to subsidize their retirees’ drug spending. These projections, in turn, have been included in their Securities and Exchange Commission filings, which in turn affect Wall Street.

Without those Medicare dollars, employers would be forced to pass the expenses on to their retirees — and their current workers, Sullivan Hare acknowledged. AFL-CIO Legislative Representative Jo Ann Volk agreed that halting the implementation of the Medicare drug benefit would have a negative impact on active workers.

For the time being, the threat of legislation to push back the start date for the drug benefit has not reached a high enough level to prompt K Street to flex its considerable muscles on the Hill, lobbyists said. But, Sullivan Hare observed, “this could drag on to December,” so interested groups will stay on top of the issue.

AARP has done little more than seek assurances from the leadership of key committees that the fiscal conservatives’ crusade is a long way from becoming a reality.

If that movement gathers momentum, however, AARP is prepared to fight, Rother emphasized.

“We would mobilize very aggressively,” he said.