The House passed its version of the Medicare Prescription Drug bill on Nov. 22 by a vote of 220 yeas to 215 nays. The Senate passed their bill, S. 1 earlier today by a vote of 54 yeas to 44 nays.

The drug benefits in the prescription drug bill are the legislation’s best-known, most expensive and least controversial component. The bill will also fundamentally change the way Medicare works. It would create new competition for Medicare patients from private health plans, increase federal payments to doctors and hospitals, and end the tradition of charging everyone in the program the same fees for the same services. The final version, however, omitted the idea of making it easier for consumers to re-import U.S. manufactured drugs from Canada, where medicines are less expensive.

Democrats assailed the bill’s incentives for private competition as a threat to Medicare’s future and a giveaway to private health plans, insurance companies and pharmaceutical manufacturers.

The Medicare prescription drug plan would help many players throughout the health delivery system with provisions favorable to ambulance companies in outlying areas, home health services and hospitals that see a large number of indigent patients. It would offer higher payments to rural health care providers, a factor that greatly increased the plan’s prospects in the Senate.

The bill’s signature provision is a drug benefit that would take effect in Jan. 2006. Under the plan, the government would pay 75% of a beneficiary’s drug costs up to $2,250 each year. After that, the beneficiary would have to pay all drug costs out of pocket until their total spending reaches $3,600.