WASHINGTON (AP) – Congressional negotiators reported progress Wednesday toward an agreement on plans for drug discount cards for older Americans, a relatively noncontroversial element of far broader, contentious legislation to create a prescription drug benefit under Medicare.

“There’s no doubt that there will be a subsidy, there is no doubt that there will be a drug card, because you need an interim program” before the full benefit would begin in 2006, said Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee.

He said aides from lawmakers in both parties and both houses had made “big headway” on the subject. Democratic aides said nothing will be settled on the issue until lawmakers return from a summer vacation in September. No details were available.

The developments came as officials in both parties sought to use the 38th birthday of the creation of Medicare to underscore their support for the program that provides health care insurance for 40 million Americans – those aged 65 and over and the disabled.

Senate Democrats handed out cupcakes to make their point, while President Bush was joined by senior citizens needing help with drug costs to make his.

Bills that the House and Senate both passed earlier this year provide for a discount card that administration officials estimate could save Medicare recipients 15 percent or more on prescription drug costs.

Both bills also provide for benefits for lower-income individuals, to be delivered through the cards, although the measures differ in details.

Under the Senate bill, for example, people with income of up to 135 percent of poverty, or $12,123, would qualify for a $600 annual subsidy. The House measure provides a sliding scale subsidy, ranging from $800 for people below 135 percent of poverty to $100 for those above 150 percent of poverty, or $13,470.

More broadly, both bills combine a new prescription drug benefit with measures to introduce new competition into Medicare. The Bush administration sought the changes, saying they were needed to modernize the program to reflect changes in health care, and also to steady Medicare’s financial underpinnings.

Difficult negotiations are expected on an overall bill since the Senate passed a bipartisan bill and the House measure was crafted to the specifications of conservatives, and drew the votes of only nine Democrats.

President Lyndon Johnson signed the Medicare law at the height of the Great Society and handed the first benefit card to Harry Truman, another former Democratic president. It was an act that conveyed that Democrats had nurtured the program into existence.

In the years since, the issue has long benefited Democrats in political campaigns, although Bush and congressional Republicans have narrowed the gap somewhat.

“Medicare is an important national achievement, and it is a continuing moral responsibility of our federal government,” the president said at a White House birthday observance. “Americans are proud of our Medicare program. We must make sure that Medicare fits the needs of our seniors today.”

As an example of the changes he said are needed in the program, Bush said that Medicare will pay for extended hospital stays for ulcer surgery, at a cost of up to $28,000 per patient. “This is important coverage. Yet Medicare will not pay for drugs that eliminate the cause of most ulcers, drugs that cost about $500 a year,” he said.

“The House and the Senate have got to work out their differences. And they’re going to,” he said.

Senate Democrats held their observance in the Capitol, and they used the occasion to charge House Republicans with trying to dismantle the program.

The House bill, said Democratic leader Tom Daschle, D-S.D., is “a license to eliminate Medicare as we know it today” because it would lead to increase premium costs for people who choose to stay in the traditional program instead of joining a private managed care program.

“We go into this negotiation with our House colleagues gravely concerned that the spirit and the meaning of Medicare to millions of senior citizens will be very detrimentally affected if the House-passed bill would ever become law,” said Daschle, who voted for the Senate version of the bill.

AP-ES-07-30-03 1910EDT

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