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Bush Details Medicare Reform Plan

In a speech before the American Medical Association Tuesday, President George W. Bush outlined his plan to reform Medicare, a program that serves 41 million elderly and disabled Americans. Currently, Medicare offers virtually no prescription-drug benefit plan. Under Bush's $400-billion proposed overhaul, seniors would be encouraged to switch to subsidized private insurance to receive comprehensive drug coverage and other benefits. NPR's Brian Naylor and NPR's Julie Rovner report.

"The element of choice is essential," Bush said in presenting his Medicare proposal. "When a bureaucracy is in charge of granting benefits, new benefits usually come slowly and grudgingly, if at all. When insurance providers compete for a patient's business, they offer new treatments and services quickly."

The Bush proposal offers three options to participate in the Medicare program.

• Seniors could choose to continue to receive traditional fee-for-service Medicare coverage, which does not currently offer prescription drug coverage. Those who choose to stay in the traditional Medicare plan would be offered unspecified coverage for high out-of-pocket expenses and a prescription drug-discount card, which the White House estimates would lead to savings of 10 percent to 25 percent. The discount card would be offered to all Medicare participants.

• The second option, "Enhanced Medicare," calls for seniors to join a health plan. In return for monthly premiums and annual deductibles, seniors would receive an unspecified prescription drug benefit. The federal government would pay most of the cost, with individual beneficiaries sharing some of the cost.

Under Enhanced Medicare, low-income seniors would receive drug coverage without paying an annual premium. Those low-income seniors not eligible for Medicaid would receive unspecified financial assistance for out-of-pocket drug costs. The plan would also provide seniors with full-coverage of preventive benefits and unspecified protection against high out-of-pocket costs. In addition, it would eliminate the lifetime limit for inpatient hospital care.

• "Medicare Advantage," the third option proposed by Bush, would allow seniors to opt out of traditional Medicare packages in favor of what the president called "low-cost and high-coverage managed care plans." Currently, 5 million Medicare participants receive their benefits from such plans.

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NPR News' Brian Naylor is a correspondent on the Washington Desk. In this role, he covers politics and federal agencies.