US President George W Bush has announced the broad outlines of his controversial plan for health care reform, which would offer senior citizens additional prescription drug benefits if they moved into private plans and paid additional premiums.
Currently 40 million elderly Americans have most of their hospital bills and doctors' fees paid by the government through Medicare, but the plan does not include drug coverage.
Bush wants to inject competition into Medicare system
In a speech to the American Medical Association, Mr Bush said that "a modern Medicare system must offer more choices and
better benefits to every senior. All seniors should have help in buying prescription drugs."
But Democrats immediately criticised the plan as inadequate, and an attack on the state-run system.
"The president's proposal is a radical prescription for dismantling Medicare that will be rejected by senior citizens and should be rejected by the Congress," said Democratic Senator Edward Kennedy, one of the architects of the original Medicare bill.
Both Mr Bush and Al Gore, his opponent in the 2000 presidential election, promised a drug benefit. Ensuring that it is put into place will strongly influence the outcome of the 2004 race.
Under the new plan, all senior citizens would receive a limited amount of help with drug costs. It would include a discount card that could cut the cost of drugs at the pharmacy by about 15%, and government help if they spend a large amount each year on drugs (to be decided, but likely to be more than $6,000 (£4,000) per year).
The poor would also get an immediate $600 drug benefit.
"You couldn't move my own mother out of Medicare with a bulldoze
Representative Billy Tauzin, Republican, Louisiana
But those who wanted full drug coverage would have to join medical insurance groups known as Preferred Provider Groups (PPOs) or Health Maintenance Organisations (HMOs), which limit choice of doctors and hospitals.
These would be known as "enhanced Medicare" and would offer the elderly other additional benefits, such as preventative care - but not until 2006 at the earliest.
These could limit their access to the physicians of their choice, which could in turn help to limit the cost of a new prescription drug benefit at a time when the federal budget is under intense pressure from tax cuts, a slowing economy and the costs of war.
But it could anger the elderly, who so far have shown little inclination to join the voluntary HMOs that are already offered by Medicare.
However, Mr Bush received an enthusiastic welcome from doctors for his proposals, which also include the reform of medical malpractice insurance, whose rising costs are forcing many doctors to cut back on the services they provide.
Patrice Klein, a neurologist from New Jersey, told BBC News Online that many colleagues were limiting their procedures in such areas as delivering babies, while many of her patients could not afford the expensive drugs she prescribed.
Mr Bush has modified his earlier proposals to ensure that all seniors get at least some drug benefit, in response to Congressional criticism.
And he has decided to leave the details of his plan, such as the levels of benefit provided, to the Congress to decide.
The powerful lobby for the elderly, the American Association of Retired Persons (AARP), gave the new plan its qualfied approval.
The AARP"s Chris Hansen told BBC News Online that the new proposals "provided good forward momentum" and that he hoped a compromise bill - hopefully with higher benefits - would pass Congress this year.
Moderate Republicans like Congressman Billy Tauzin of Louisiana said that "there was more we can agree than disagree on" but indicated that he would be inclined to increase the drug benefits to those who remain in traditional Medicare programmes.
"You couldn't move my own mother out of Medicare with a bulldozer," he said. "She trusts it and believes in it."
But increasing those benefits would reduce the money available for reform of the whole system, according to researcher Marilyn Moon at the Urban Institute.
She said that insuring against catastrophic drug costs, and helping the poor, could consume more than $200bn of the $400bn earmarked by the Bush administration for health care reform over the next 10 years.
That would leave only about $200bn to help pay the estimated $1.3 trillion in drug costs that elderly Americans will face over the next decade.