House Kids’ Insurance Bill Faces Budget Questions, Veto Threat

House legislation (HR 3162) that would expand and reauthorize the State Children's Health Insurance Program and make revisions to Medicare will need to be revised to meet pay/go rules before it can be considered by the full chamber, CongressDaily reports.

A preliminary scoring by the Congressional Budget Office found that over the next 10 years, the bill marked up by the House Energy and Commerce Committee would have a deficit of $90 billion, most of which would occur in the second half of that time period.

The House Ways and Means Committee bill would have a $76 billion deficit in a decade, all of which would occur in the second half of that time period, according to CBO Director Peter Orszag (Johnson, CongressDaily, 7/27).

The legislation, called the Children's Health and Medicare Protection Act, would reduce payments to Medicare Advantage plans and increase the federal cigarette tax by 45 cents per pack to increase SCHIP funding for the program by $50 billion over five years.

Under the bill, a scheduled 10% cut in Medicare payments to physicians would be reversed and physicians would receive a 0.5% increase in fees for each of the next two years. The measure also would freeze reimbursement rate increases to skilled nursing facilities, home health agencies and long-term care hospitals, while increasing by 1% rates to inpatient rehabilitation facilities.

The bill would equalize payments between MA plans and traditional Medicare over five years, reducing federal reimbursements by nearly $50 billion over that time period.

In addition, the bill would make revisions to the system that sets spending targets for Medicare outlays for physicians' care. SCHIP is set to expire on Sept. 30 (California Healthline, 7/26).

Unlike the Senate bill, the House version of SCHIP legislation does not contain a funding "cliff" to meet pay/go requirements in the second five years of the 10-year budget window.

However, bill sponsors are committed to following pay/go rules rather than waiving them, according to a House Ways and Means Committee aide.

Revising the legislation to meet pay/go rules "might represent the most significant hurdle facing" the committees in preparing the bill for a House vote, as both committees "have solid majorities to pass the legislation," according to CongressDaily.

In related news, the Bush administration issued a formal veto threat against the House legislation.

HHS Secretary Mike Leavitt in a letter to the chairs and ranking members of both committees said that if the "legislation were presented to the president as it is currently drafted, he would veto it" (CongressDaily, 7/27).

Meanwhile, House Republicans in the Energy and Commerce and Ways and Means committees on Thursday tried to delayed committee mark ups by forcing the clerk to read the SCHIP legislation, CQ Today reports (Wayne et al., CQ Today, 7/26). The legislation is 481 pages.

House Ways and Means Committee ranking member Jim McCrery (R-La.) said the move was necessary to protest repeated attempts by Democrats to prevent Republicans from reviewing tax measures, such as the tobacco tax increase contained in the measure. McCrery said a hearing on the bill should have been held before going to mark up (Reichard, CQ HealthBeat, 7/26).

House Energy and Commerce Committee Chair John Dingell (D-Mich.) said Democrats had "little choice" but to draft the legislation without Republican input because of Bush's veto threat and Republican support for the veto. "I regret that [Republicans] have apparently chosen to side with the president's outrageous threat," Dingell said (Wayne, CQ Today, 7/26).

In a letter on Wednesday to Ways and Means Committee Chair Charles Rangel (D-N.Y.) and Dingell, McCrery and Energy and Commerce Committee ranking member Joe Barton (R-Texas) wrote, "We urge you in the strongest possible terms to at least attempt to reach bipartisan consensus before using children's health to achieve partisan political advantage."

At the Energy and Commerce Committee mark up, Dingell said that the request is a "belated desire for a more lengthy process to produce a bipartisan consensus. I wish that such an outcome were possible, but given the president's pledge to veto a solidly bipartisan legislative product in the Senate, we have little choice but to move forward in this manner" (Johnson, CongressDaily, 7/26).

America's Health Insurance Plans on Thursday launched an advertising campaign denouncing the proposed cuts to MA plans contained in the House version of SCHIP legislation, Reuters reports (Dixon, Reuters, 7/26).

The ads will feature actual MA beneficiaries voicing concerns over the cuts. According to one ad, lawmakers who vote for MA cuts are "not too concerned about the millions ... who will be forced to pay more for health care and lose benefits we depend on every day" (California Healthline, 7/26).

However, Tricia Neuman, vice president of the Kaiser Family Foundation and director of the Foundation's Medicare Policy Project, said that it is "not necessarily the case that people are better off financially if they sign up for" MA plans because the plans can charge higher physician or hospital copayments.

AHIP declined to say how much the campaign would cost (Reuters, 7/26).

Summaries of an editorial and an opinion piece on the SCHIP legislation appear below.

• John Goodman, Wall Street Journal: "On the surface, congressional Democrats appear to be rescuing children from the scourge of uninsurance" by reauthorizing SCHIP, Goodman, president of the National Center for Policy Analysis, writes in a Journal opinion piece. However, the "reality is quite different" because under Democratic proposals, "millions of children will have less access to health care than they do today" because many physicians do not accept Medicaid and SCHIP, and the "same will surprisingly be true for many low-income seniors" because of the proposed cuts to MA plans, according to Goodman (Wall Street Journal, 7/27).
• Washington Times: Rep. Pete Stark (D-Calif.) and Dingell "seem determined to march their caucus back to minority status by forcing [Democrats] to cast a highly unpopular vote to cut" payments to MA plans, according to a Times editorial. MA "is one of the only hopes of reforming this exploding entitlement program," but "its biggest offense in the eyes of the left is it doesn't fit their one-size-fits-all ideology," according to the editorial. It continues, "Democrats should beware following ... Stark and Dingell's ideologically driven lead" (Washington Times, 7/27).

The following broadcast programs recently reported or are scheduled to report on SCHIP legislation.

• C-SPAN's "Washington Journal": The segment includes a discussion with Rep. Dave Camp (R-Mich.), ranking member of the House Ways and Means Health Subcommittee ("Washington Journal," C-SPAN, 7/26). Video of the segment is available online.
• NPR's "Morning Edition": The segment includes comments from Reps. Dennis Hastert (R-Ill.), Henry Waxman (D-Calif.) and John Shadegg (R-Ariz.) and a health care lobbyist (Rovner, "Morning Edition," NPR, 7/27). Audio of the segment is available online.
• PBS' "Washington Week": The program on Friday is scheduled to include a discussion with Washington Post columnist David Broder ("Washington Week" Web site, 7/27). Additional details about the segment are available online. Broadcast information also is available online. Video of the segment will be available online Friday after the broadcast; a transcript will be available online Monday afternoon.