Saying that the new prescription drug benefit law threatens to bring down the entire Medicare system that serves 40 million Americans, the AFL-CIO and leading Democrats in Congress pledged to work for legislation to correct the many problems that the new law created.

Senate Democratic Leader Tom Daschle (S.D.), who called the new law "lousy legislation," quickly introduced legislation to repeal some provisions and allow Americans to import cheaper drugs from Canada and Western Europe.

In March only three months after the largest restructuring ever for the 40-year-old fund Medicare fund trustees in their annual report said the hospital insurance trust fund will be exhausted by 2019 seven years earlier than forecast last year.

The trustees said the major factors contributing to the bleaker forecast are sharply rising health care costs, the new prescription drug benefit, and a slow economy with high unemployment and slow growth in wages the tax base from which Medicare pays for benefits.

The Medicare trustees said the new prescription drug law will significantly increase costs for the trust fund "primarily through increased payments to rural hospitals and private health plans."

As the bill moved through Congress, the AFL-CIO and other citizen groups protested provisions that will shift Medicare payments to private health insurance companies and shift many seniors and other Medicare beneficiaries into HMOs.

AFL-CIO Pres. John J. Sweeney said the bill was "a partisan proposal that, under the guise of creating the much needed and long-promised prescription drug benefit, would reward the pharmaceutical companies and HMOs that are the political backers of the plan's sponsors."

Sweeney predicted that, as Medicare beneficiaries learn more about how the plan affects them, it will be "no surprise to see seniors expressing their anger at the polls." A survey of senior voters by Peter D. Hart Research Associates found that close to two-thirds said Congress and the White House should come up with better legislation.

Sen. Edward M. Kennedy (D-Mass.) called the law "the first step towards a total dismantling of Medicare. . . . In exchange for destroying Medicare, it offers senior citizens a paltry and inadequate drug benefit. And the moment it is implemented, it will make 9 million senior citizens . . . almost a quarter of all senior citizens, worse off than they are today."

Under the new law:

• Medicare recipients will be offered prescription drug discount cards beginning this spring. The cards will be offered by 28 competing private companies approved by the Department of Health and Human Services (HHS). The firms probably will charge different annual fees to a maximum of $30 and charge different prices for the same medications. HHS estimated that the cards will provide savings between 10 to 25 percent.

  Analysts warned that seniors may obtain greater discounts with some non-government discount drug programs or through Internet pharmacies in the United States and abroad that may offer lower prices with no annual fees.

  The Alliance for Retired Americans warned seniors to beware of scam artists using telemarketers or going door-to-door offering Medicare prescription drug cards as a ploy to get seniors' Social Security numbers and bank information. Information on legitimate discount drug programs by areas is available at www.medicare.gov or call toll free 1-800-633-4227.

• In 2004 and 2005, singles with incomes below $12,569 and couples with incomes below $16,862 who do not have Medicaid coverage will receive the discount cards for free and also receive a $600 credit with the card. Co-pays for this group will be 5 percent and 10 percent, depending on income levels.
• Beginning in 2006, when the full program takes effect, the drug benefit will be administered by private firms on a regional basis. Beneficiaries can either obtain separate policies for drugs or get drug coverage by joining private health plans that also provide the rest of their health care, such as health maintenance organizations (HMOs).
• The drug insurance premiums will cost $35 a month ($420 a year) in addition to current Medicare premiums. After the $250 deductible is met, the insurance will pay 75 percent of drug costs up to $2,250 a year. Seniors will then pay the full cost of medications until their out-of-pocket spending on prescriptions reaches $3,600. After that limit is reached, participants will pay $2 for generic drugs and $5 for brand-name drugs or 5 percent of the total cost of the drugs, whichever is more.

  Premiums, deductibles and other costs will be lower for lower-income seniors. However, for the first time in Medicare's 40-year history, assets of lower-income Americans will be taken into account for benefits.

• Beneficiaries who choose a private plan would have no lifetime limit for inpatient hospital care and be provided with coverage for preventive services.
• Annual deductibles for Medicare Part B's outpatient care and doctor visits will increase from the current $100 to $110 in 2005 and continue to increase every year after that.
• All Medicare beneficiaries currently pay 25 percent of Medicare Part B for outpatient care and doctor visits. The new law creates a higher scale for those with annual incomes of $80,000 or more, with those making over $200,000 maxing out at 80 percent co-payments.
• Employers that offer equivalent drug coverage for retirees would receive tax-free subsidies and tax advantages worth about $86 billion over 10 years. Employers also would be allowed to offer premium and cost-sharing help for retirees who enroll in Medicare drug plans.
• Tax-free health savings accounts would be allowed for people with health insurance policies with high deductibles – $1,000 a year for singles or $2,000 a year for families.
• A six-year pilot program will be established in six metropolitan areas in 2010 that will force Medicare's original fee-for-service system to compete for patients based on price against private health plans. Opponents of this plan say it would force many seniors into private plans or to pay more for health care.

• Only prescription drugs certified by HHS can be imported from Canada. The bill retains the ban on other drug imports.
• The law prohibits Medicare from negotiating prices for prescription drugs. The AFL-CIO called this provision a "$139 billion windfall profit" for the pharmaceutical industry, which lobbied heavily for the bill.

Under the prescription drug plan, most participants are expected to pay as much as $1,170 a year, including the $420 premium, the $250 deductible, and the 25 percent co-payment on the first $2,000 of drug purchases after the deductible is met. In return, they would receive as much as $1,500 in drug subsidies.

Throughout debate on the new law, official cost estimates for the Medicare fund from the Congressional Budget Office were set at about $400 billion over 10 years.

However, chief Medicare actuary Richard S. Foster was reported to have claimed that Medicare and Bush administration officials knew last summer that new estimates put the cost at more than $500 billion. The White House recently invoked executive privilege to protect its chief health policy adviser Douglas Badger from testifying before the House Ways and Means Committee about the alleged suppression of the cost estimates.

The vote on the Medicare bill in the Senate was 54 to 44. Voting in favor of the bill were 42 Republicans, 11 Democrats and one independent. Voting against were 35 Democrats and nine Republicans.

The vote in the House was 220 to 215. Voting in favor were 204 Republicans and 16 Democrats. Voting against were 189 Democrats, 25 Republicans, and one independent.

House passage of the bill was frenzied. The roll call vote began at 3 a.m. on Nov. 22, 2003, and ended two hours and 15 minutes later – the longest roll call in House history.

Democrats said the middle-of-the-night legislative maneuver hurt their chances to defeat the bill. More controversy erupted when some House members said they were threatened or offered inducements to vote for the bill.