Washington ? The House-Senate negotiation to reconcile two different Medicare prescription drug plans is expected to turn into a political battle over how much senior citizens will have to pay out of pocket and how much to privatize the program.

Neither plan is seen as particularly generous to seniors, but where to set the out-of-pocket costs is perhaps the most politically explosive decision conferees will have to make when they consider the legislation. Many conservatives believe the measure is too costly.

Already members of Congress have been complaining about gaps in coverage in both the House and Senate versions.

Many members fear that a new benefit deemed as too skimpy could arouse the ire of senior citizens as an election year draws closer.

John Rother, legislative director for AARP, the powerful lobbying organization for seniors, said the group’s members “see the whole benefit gap as a nonstarter. They see it as some kind of a trick. It is viewed in very pejorative terms.”

For his part, President Bush wants action. In his weekly radio address, delivered the day after the two versions of the bill passed, Bush urged Congress to “Finish the job of strengthening and modernizing Medicare so that I can sign this crucial reform into law.”

“This is an issue of vital importance to senior citizens all across our country,” Bush said. “They have waited years for a modern Medicare system and they should not have to wait any longer.”

Both House and Senate versions would cover drug costs up to the first few thousand dollars a year, as well as costs over a “catastrophic” threshold, but seniors would have to pay all costs between the initial cutoff point and the start of the catastrophic coverage.

Privatization battle brews

Another major fight is brewing over a House provision that would call for private health-care plans and the traditional fee-for-service Medicare program to compete directly to provide prescription drug benefits by 2010.

Conservatives fear that this privatization section would be struck from the bill in conference but say they will not give up lightly.

“We are trying to get people to fight tooth and nail for it,” said Tripp Baird, a Heritage Foundation analyst. “Otherwise, there is nothing in it for us.”

Baird noted that President Bush initially insisted that any prescription drug benefit would have to be tied to a Medicare reform plan but then abandoned that idea.

“I have no doubt politics is driving the policy,” he said.

Push for passage

The House and Senate approved competing versions of a prescription drug benefit early Friday. Congressional leaders and the White House are pushing for final passage by the August recess for what would be the biggest expansion of Medicare since its creation in 1965.

Both measures have a similar, highly complex, design for the benefit package, which would be provided through private health-care plans. The bill envisions the creation of “drug-only” private health-care plans that would compete to provide drug coverage for senior citizens in regions around the country.

Another issue in the conference committee will be over a “fallback” for seniors to obtain their coverage directly from the traditional Medicare plan if there are not at least two private health-care plans in their regions offering prescription drug coverage, said Edmund Haislmaier, a policy analyst at the Heritage Foundation. The Senate bill contains the “fallback” provision; the House does not.

In general, Medicare experts said the Senate appeared to have the upper hand for its version of cost-sharing between the government and recipients because if the out-of-pocket numbers changed dramatically, the bipartisan majority that supported the bill in the Senate could easily crumble.

Under the Senate plan, seniors would first pay a $275 deductible before the government would begin to pick up half of their prescription drug costs up to $4,500. Seniors then would have to pay 100 percent of the costs between $4,500 and $5,800 — a gap called the “doughnut hole” — after which they would have to ante up only 10 percent.

By contrast, under the House bill, after a $250 deductible is met, the subsidies would be initially higher, 80 percent of costs but only up to $2,000. Then there would be a larger gap in coverage, with seniors having to pay all their drug charges between $2,000 and $4,900.

Several senators said Friday that if they departed too much from their plan in the compromise bill, it might not pass the Senate. But Gail Shearer, health-care analyst for Consumers Union, said she expected the government subsidy to be sweetened in conference and set somewhere between the Senate’s 50 percent and the House’s 80 percent.

Both measures call for senior citizens to pay $35 a month in premiums to obtain coverage.

Risks, rewards

In order to lure private health-care plans into offering drug coverage, both bills call for the government to offer substantial, though complex, subsidies aimed at reducing their economic risks. When Medicare tried to attract more private health-care plans to offer comprehensive coverage a few years ago, many companies at first rushed in to cover seniors, then gradually backed away.

Another issue is whether private employers who pay the health insurance of their retired workers will simply drop their coverage and expect the government — and taxpayers — to pick up the additional costs.

There is a little that Congress can do about this possibility. Private employers have increasingly been dropping health-care coverage for retirees. The Congressional Budget Office said as many as 37 percent of employers would drop prescription drug coverage for retirees if the plan were adopted. This could add billions of dollars to the final cost.