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PROSPECTS FOR MEDICARE COST-CUTTING BILL SEEM DIM

The Bush administration will ask Congress to increase the monthly premiums wealthier Medicare beneficiaries pay for prescription drug coverage, officials said Friday.

The first-of-its-kind legislation is designed to reduce Medicare's strain on the federal treasury. Though Congress passed a law requiring the president to submit such cost-saving proposals, its prospects for passage are dim.

The bill would reduce the government subsidy for wealthier beneficiaries of the Medicare drug program. Individuals making $82,000 a year, or couples earning more than $164,000 a year, would pay higher premiums. It is not clear how much of an increase beneficiaries would face.

The income thresholds would not be indexed for inflation, so more people would eventually pay the higher premiums.

Bush's proposal also includes limits on noneconomic and punitive damages awarded in medical malpractice cases.

In addition, it gives the secretary of the Department of Health and Human Services authority to set up a program that pays health care providers based partially on the quality of their work. Now, Medicare simply pays a set fee for a particular service.

The proposal is designed to keep Medicare from relying so much on the general treasury. The law requires the president to propose such legislation once Medicare's Board of Trustees project the program will soon rely on general revenue for more than 45 percent of its funding. That projection occurred for the second consecutive time last year.

"This is an emergency that grows by the day," said Health and Human Services Secretary Mike Leavitt.

Medicare provides health coverage to about 44-million elderly and disabled people. Its spending is expected to reach $425-billion this year. The program is growing at a rate of about 7 percent a year, which is a threat to other essential programs, lawmakers said.

Democrats also have offered ways to slow Medicare spending. But their preference is to trim payments to private insurers serving the elderly through the Medicare Advantage program. The administration has opposed that idea.

Democrats have called the 45 percent threshold arbitrary.

"The trigger was created as a political ploy to foster a panic that Medicare is unsustainable," said Rep. Pete Stark, D-Calif.

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