Bush Administration Supports Medicare Cost-Containment Plan
The Bush administration has said it supports a Republican-backed House Medicare cost-containment proposal that would require congressional action on ways to reduce Medicare spending if the program's costs increase more quickly than anticipated, the New York Times reports. Negotiators attempting to reconcile the House and Senate Medicare bills (HR 1 and S 1) are also considering a similar proposal from senators who are members of the conference committee. The plans come in response to federal officials who say that even without implementing the proposed Medicare prescription drug benefit, the federal government's general revenue spending on Medicare in 2012 will total $170 billion, compared with $78 billion in 2002. The General Accounting Office has said that Medicare's "growing reliance on general revenue impose[s] a mortgage on future generations," the Times reports. Under the latest proposal from House Republicans, Medicare could be declared "programmatically insolvent" if the program's trustees said that general tax revenue would account for more than 45% of total Medicare spending at any point in the next seven years, according to the Times. If trustees make such predictions two years in a row, the president would be required to propose ways to reduce Medicare's dependence on general revenue, which could include cutting benefits, increasing premiums or raising payroll taxes. The plan also calls for expedited procedures to allow Congress to consider the cost-containment legislation within six months, overriding normal Senate and House rules and limiting debate in the Senate. The Senate proposal also calls on the president and Congress to take action to control costs if general tax revenue exceeds 45% of projected Medicare spending and would prohibit the Senate from considering any law that increased use of general revenue beyond that percentage unless 60 senators supported doing so. The Times reports that the Senate's move to offer its own cost-containment proposal, despite objections from many Democrats and advocates for the elderly, signals that any final agreement on the Medicare legislation will likely contain a cost-containment measure.
Both plans would "fundamentally change the financing of Medicare" and would make it more difficult for lawmakers to increase the amount of the proposed drug benefit, raise payments to doctors or provide coverage for more outpatient services, the Times reports. Rep. Jeb Hensarling (R-Texas) said that the two proposals would not go far enough, adding that there appears to be "little cause for optimism" on the issue. Rep. John Spratt Jr. (D-S.C.) said the proposals would "undermine Medicare's protection for the elderly." The Times reports that Sen. John Breaux (D-La.), one of the two Democrats on the conference committee, has said he favors a cost-control mechanism. But Sen. Max Baucus (D-Mont.), the other Democratic conferee who has been participating in the negotiations, has said that any cost-control measure should not "single out Medicare"; he said he prefers offsetting Medicare cost-control measures with similar requirements for tax cuts. The Leadership Council of Aging Organizations said in a letter to conferees, "Requiring congressional action if and when Medicare spending exceeds an estimated target would bring fear and uncertainty to millions of Americans at a time in their lives when they need security." The letter adds that an unforeseen emergency, such as an outbreak of severe acute respiratory syndrome, could make spending estimates irrelevant (Pear, New York Times, 11/4).
Requiring traditional, fee-for-service Medicare to compete with private health plans could make coverage unaffordable for lower-income seniors in some regions of the United States, according to a new study by a 12-member panel convened by the National Academy of Social Insurance, the AP/Milwaukee Journal-Sentinel reports. The panel is made up of health care experts and academics (Sherman, AP/Milwaukee Journal-Sentinel, 11/3). Mark Schlesinger, a professor at Yale and Rutgers universities and chair of the panel that wrote the report, said, "There is no evidence -- repeat, no evidence -- that private plans would reduce long-term (spending) growth rates" (Kemper, Los Angeles Times, 11/4). The report notes that private health plans have "done little to hold down long-term growth in private health care spending," CongressDaily reports (Heil, CongressDaily, 11/3). Because many private plans tend to "cherry pick" the healthiest patients, it is impossible to predict whether direct competition between traditional Medicare and private health plans "will not produce a death spiral" for traditional Medicare in some parts of the country, Schlesinger said, the Los Angeles Times reports (Los Angeles Times, 11/4). However, the panel said that private plans could improve coverage for Medicare beneficiaries who are able to navigate the "complex proposals," according to Cox/Richmond Times-Dispatch (Cox/Richmond Times-Dispatch, 11/4). Further, some members of the panel said that protecting traditional Medicare from competition with private plans "is logically and practically inconsistent with the desire to make choices available to beneficiaries." The report recommends instituting a pilot program to test competition among private insurers but not between traditional Medicare and private plans. The report also says that "the future of health care for seniors should include a mix of original Medicare and private insurance plans," according to the AP/Sentinel (AP/Milwaukee Journal-Sentinel, 11/3). "We believe providing security and stability for people who need security and stability is paramount over competition," Schlesinger said (Los Angeles Times, 11/4). The report is available online. Note: You will need Adobe Acrobat Reader to view the report.
CMS Administrator Tom Scully called the study "precooked" and said that the private competition proposal Medicare negotiators are considering represents a "modest, modest, modest change" from the current system, under which 12% of Medicare beneficiaries are enrolled in private plans. "Nobody's talking about getting rid of Medicare," he added. Karen Ignagni, president and CEO of the American Association of Health Plans, said that many of the panel's criticisms of Medicare HMOs -- including the frequency with which private plans drop Medicare+Choice coverage -- are the result of insufficient funding from the government to such plans (Los Angeles Times, 11/4). Scully said that the competition provision being considered by the conference committee is a "watered down version" of a competition measure recommended in 1999 by a congressional Medicare commission, CongressDaily reports (CongressDaily, 11/3). The current framework negotiators are using to discuss the competition provision -- which was developed by Rep. Bill Thomas (R-Calif.), the conference committee's chair -- does not include a number of specifics that could be determined later, including when such a program would begin. The proposal includes new language designed to make the provision "more palatable" to Senate Democrats, according to Sen. Don Nickles (R-Okla.).
On Monday, Medicare conferees continued to discuss key issues, including cost containment, the competition provision and allowing U.S. residents to purchase medications from foreign nations. Negotiators "planned to break without reaching accord on any issues ... in contrast to expectations last week for a swifter pace," CongressDaily/AM reports (Heil, CongressDaily/AM, 11/4). Scully said that conferees have reached agreements on 95% of the issues, adding that although some "controversial" provisions remain, there is "nothing that would be a bill terminator," according to CongressDaily (CongressDaily, 11/3).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.