A sense of threat and gloom now hangs over prospects for a Medicare prescription drug benefit, but Congress owes it to itself and America’s seniors — especially the neediest among them — to pass a bill this year.

In the end, if agreement isn’t possible on a comprehensive benefit available to all seniors, Congress may have to settle for a stripped-down benefit to protect the

[IMGCAP(1)] 13 million who lack drug coverage from catastrophic drug costs.

Before opting for the minimum, House and Senate conferees — with active input from President Bush — should (and will) try to work out a compromise between the bills already passed by the two chambers.

They also should consider the new Democrat proposal — mush simpler and probably less costly — sponsored by Rep. Cal Dooley (D-Calif.) and 45 co-sponsors.

The sense of amazed optimism that greeted passage of the two bills prior to the July Fourth Congressional recess has dissolved into one of pessimism based on virtual ultimatums from House conservatives, mainstream Democrats and the AARP that they will scuttle any final agreement that does not satisfy them.

One who doesn’t share in the gloom is Tom Scully, head of the administration’s Center for Medicare and Medicaid Services, who told me: “It’s going to be difficult to get an agreement, but nowhere near as difficult as you’d think from reading the newspapers.

“The nay-saying and gloom you hear is not coming from the people who are involved in the conference,” he said. “All of them want to get a bill done. The president thinks we’ve got to get a bill.

“I have no doubt that there are strongly held views on both sides, but I’ve been in conferences before where the two sides started out a lot further apart than they are now.”

Indeed, there are considerable similarities between the bipartisan bill that passed the Senate, 76-21, on June 27 and the Republican-written measure that barely passed the House, 216-215.

The two have the same estimated cost, $400 billion over 10 years, offer a voluntary benefit to all seniors and rely on basically the same private delivery system.

Each plan gives all seniors a drug discount card until the full program is up and running in 2006, then asks seniors to pay a $35 monthly premium and deductibles of $250 or $275, and provides substantial protection against “catastrophic” drug outlays above $4,900 (in the House bill) or $5,800.

To save money, each bill also contains a “doughnut hole” in which seniors have to pay the full cost of their drugs — between $2,000 and $4,900 in the House bill, $4,500 and $5,800 in the Senate.

As conferees began working this week, they were being pressured by party hard-liners threatening to block passage of a conference report.

Conservatives are demanding that the conferees stick with the House bill’s creation of a “premium support” system whereby traditional fee-for-service Medicare would compete with private managed care plans after 2010.

Democrats and the AARP consider this “privatization … the end of Medicare.” Republicans say that an “open-ended” new Medicare entitlement will break the federal budget without “premium support.”

Forty-four conservatives wrote Bush threatening to oppose a conference agreement if it didn’t hew to the House line.

Virtually all House Democrats voted against the House measure and 37 Senate Democrats, including Sen. Edward Kennedy

(D-Mass.), the key player in crafting the Senate’s bill, wrote Bush vowing to oppose a conference report that moved in the House direction.

AARP CEO Bill Novelli wrote Speaker Dennis Hastert (R-Ill.) and Senate Majority Leader Bill Frist (R-Tenn.), calling for “a better bill than the ones passed by either house” and warning that “there are a number of fundamental issues … that must be fixed before the AARP and its members could support the conference agreement.”

Besides opposing “premium support,” Democrats and the AARP want the government to guarantee a drug benefit if private insurance plans fail to deliver one.

AARP also regards benefit levels in the two plans as inadequate to attract participation by seniors. And both AARP and conservative groups such as the Heritage Foundation contend that, as presently designed, the two bills will allow companies to drop drug coverage that they now provide for 9.5 million retirees.

How to break the impasse? There seem to be four possibilities. As Democrats urge, Bush could arm-twist House Republicans into passing a conference report more like the Senate bill than the House measure.

Second, Republicans imagine that they could produce a bill satisfactory to House conservatives, pass it through the House and then dare Senate Democrats to filibuster it and risk the wrath of voters.

The third solution, touted by almost everyone as best, is to produce a new bill that “threads the needle” between the House and Senate versions, “finesses” differences and relies on “new ideas.”

Finally, if agreement can’t be reached, Congress should at least pass a bill aiding the neediest seniors. It could be far less costly than $400 billion and provide a base for future expansion of the drug program. And anyone who voted against it would look like Scrooge.

It’s not the preferred option, but if hard-liners succeed in blocking a good measure because it’s not perfect, then aiding the neediest is better than nothing.