Medicare Drug Bene 10 yr cost is $720B or $1.2 T - gross or net?

[papau]

WaPo report's that the Medicare prescription drug benefit will end up costing more than $1.2 trillion over the next 10 years — up from $400B at passage and last Sept's WH number of $534 billion over 10 years. BUT AP prefers the $720 billion that McClellan said will be the bottom line on the program after savings and offsets. And the NYT expains/reports the WH "offsets" as the premiums that would be paid by Medicare beneficiaries, compulsory contributions by states or savings to Medicaid that would result from the new law.

http://www.washingtonpost.com/wp-dyn/articles/A9328-2005Feb8.html

Medicare Drug Benefit May Cost $1.2 Trillion
Estimate Dwarfs Bush's Original Price Tag
By Ceci Connolly and Mike Allen
Washington Post Staff Writers
Wednesday, February 9, 2005; Page A01


The White House released budget figures yesterday indicating that the new Medicare prescription drug benefit will cost more than $1.2 trillion in the coming decade, a much higher price tag than President Bush suggested when he narrowly won passage of the law in late 2003.

The projections represent the most complete picture to date of how much the program will cost after it begins next year. The expense of the new drug benefit has been a source of much controversy since the day Congress approved it, with Democrats and some Republicans complaining that the White House has consistently low-balled the expected cost to the government.

As recently as September, Medicare chief Mark B. McClellan said the new drug package would cost $534 billion over 10 years. Last night, he acknowledged that the cumulative cost of the program between 2006 and 2015 will reach $1.2 trillion, but he cited several major savings and offsets that he said will reduce the federal government's bottom-line cost to $720 billion.

The disclosure prompted new criticism by Democrats about the administration's long-term budget estimates. It also showed that Medicare, the national medical insurance program for seniors, may pose a far more serious budgetary problem in the com- ing decade than concerns about the solvency of Social Security.

At a House Ways and Means Committee hearing, Rep. Rahm Emanuel (D-Ill.) taunted Treasury Secretary John W. Snow about the rhetorical discrepancies.

"If you're looking for a crisis, I would suggest you look at a crisis that was self-made in just last year, because the crisis exists in what's happened to Medicare by weighing it down," Emanuel said. "Those of us who told you it was going to cost twice as much were right."<snip>



http://www.usatoday.com/news/washington/2005-02-09-microsoft_x.htm
Medicare drug aid to cost $720B 1st decade

WASHINGTON (AP) — Medicare's new prescription drug program will cost taxpayers $720 billion over its first 10 years, with costs reaching $100 billion a year by the middle of the next decade, according to a new estimate by the Bush administration.

The new number is far higher than any previous estimate produced by the administration or Congress, but it reflects what lawmakers and health care analysts have known all along: As baby boomers turn 65 and swell Medicare's rolls, the government's tab for their health care is expected to rise substantially.

The new projection issued Tuesday runs from 2006 to 2015 and is not directly comparable to the $400 billion estimate lawmakers had when they narrowly approved Medicare legislation in 2003 or to the revised estimate of $534 billion that the White House issued just two months later, after the law was enacted.

Those figures covered the 10 years from 2004 to 2013 — two years to devise the drug benefit and put it in place and eight years in which the government would pay some drug costs for Medicare beneficiaries.

The drug benefit begins in January and the $720 billion includes the years 2014 and 2015, Medicare spokesman Gary Karr said.<snip>


http://www.nytimes.com/2005/02/09/national/09medicare.html?

February 9, 2005
New White House Estimate Lifts Drug Benefit Cost to $720 Billion
By ROBERT PEAR

ASHINGTON, Feb. 8 - <snip>In a recent interview, the new chairman of the Senate Budget Committee, Judd Gregg, Republican of New Hampshire, said he wanted to "put the brakes on the growth of entitlements" and take a close look at the new Medicare law.

"Since it was sold as a $400 billion program, that's what we should keep it at," Mr. Gregg said. <snip>

Representative Pete Stark of California, the senior Democrat on the Ways and Means Subcommittee on Health, said: "I told you so. We can't trust numbers provided by administration officials. They'll say anything to get a bill passed. And if the new drug benefit costs more, the extra money goes to their friends in the pharmaceutical industry, not to senior citizens."

Mr. Stark said the higher cost estimate showed that Congress should allow the secretary of health and human services to negotiate with drug manufacturers to secure lower prices for Medicare beneficiaries. The law forbids such negotiations. But Tommy G. Thompson, the former secretary of health and human services, said he wished Congress had given him the power to negotiate.<snip>