WASHINGTON, Jun 08 (Reuters Health) - The likely cost of covering prescription drugs for the 39 million seniors in the Medicare program is rapidly rising, according to new cost estimates released Friday by the Congressional Budget Office (CBO).

Staffers for several key lawmakers said that the new estimates are lower than they had feared. But they also acknowledged that double-digit inflation in prescription drug costs and growing Medicare beneficiary rolls are adding urgency to passing a prescription drug benefit this year, a priority Republicans and Democrats say they both share.

Legislators are trying to fit their proposals into a $300 billion cap for prescription drugs and other Medicare reforms laid down in a budget resolution passed last month.

The CBO predicted that a bipartisan prescription drug plan sponsored by Sens. John Breaux (D-La.) and William Frist (R-Tenn.) would cost the federal government $176 billion over the next 10 years. That plan, along with a similar House plan passed last year, covers half of the out-of-pocket cost of prescription drugs up to $2,100 per year and all costs above $6,000 per year.

A competing plan, sponsored last year by Sen. Robert Graham (D-Fla.), splits costs with seniors up to $3,500 and then pays 75% of drug bills up to $4,000. The plan covers all drug costs above $4,000. CBO estimated Friday that Graham's proposal would cost $318 billion over the next decade.

"We were thinking that this thing could be in the neighborhood of $350 or $400 billion, so it's encouraging," a staffer for a leading Democratic senator told Reuters Health.

But the CBO report also showed that the likely cost of covering prescription drugs is climbing quickly. Friday's estimates for the Graham proposal and the Breaux/Frist bill were 31% and 18% higher than last year, respectively. The House plan was judged Friday at $157 billion over 10 years, 12% more expensive this year than it was last year.

Democrats seized on rising costs predicted in the report to bolster their claim that Congress should pass a prescription drug plan before tackling the more daunting task of overall Medicare reform.

"The longer we wait, the more expensive this benefit will become," said Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, which has jurisdiction over Medicare.

Many Republicans, including President Bush, favor the Breaux/Frist bill in part because it makes a new prescription drug plan part of a larger overall Medicare reform package. Many Democrats want to push ahead with a drug plan regardless of whether larger reforms pass this year.

The CBO's scoring of the Breaux/Frist package at $176 billion over 10 years shows that the bill offers a "cushion" to pay for both prescription drugs and broader changes in Medicare while staying within the budget, one Republican staffer said.

"There are other critical improvements to Medicare that are long overdue," Senate Finance Committee ranking member Charles E. Grassley (R-Iowa) said in a statement. For example, Medicare currently has no cap protecting elderly Medicare beneficiaries from catastrophically high healthcare costs in any given year, said Grassley, who has said he favors the plan included in the Breaux/Frist bill.

Democrats have criticized the Breaux/Frist plan as too weak, arguing that does not help seniors pay for any drug costs between $2,100 and $6,000 per year.

Sen. John D. Rockefeller (D-W.Va), who chairs the Finance subcommittee on health, called CBO's latest figures "great news." The numbers "confirm that we can provide a universal benefit," he said.

From ReutersHealth.com