Medicare Negotiators Miss Self-Imposed Friday Deadline

Negotiators attempting to reconcile the House and Senate Medicare bills (HR 1 and S 1) failed to meet their self-imposed goal of drafting an outline of a deal by Friday, the AP/St. Louis Post-Dispatch reports. Republican conferees leading the negotiations said they have set a new goal of completing an outline by the middle of this week (Sherman, AP/St. Louis Post-Dispatch, 10/26). Speaking to reporters Friday, House Ways and Means Chair Bill Thomas (R-Calif.) said that conferees have resolved the "vast bulk" of the issues on the table, but some "make-or-break" elements of the bill have yet to be decided (Cohn/Stanton, CongressDaily/AM, 10/27). Issues that have yet to be fully resolved include:

Income-relating: Negotiators are considering whether to require higher-income Medicare beneficiaries to pay higher premiums for Medicare Part B, which covers outpatient services. Under a proposal being discussed by conferees, beneficiaries with incomes of $80,000 and higher would pay an increasing percentage of their premiums, up to 80% for those with the highest incomes, according to one source familiar with the proposal, the Post-Dispatch reports.
Cost-containment: Conferees are considering a proposal that would encourage Congress to impose a limit on future Medicare spending if it rises unexpectedly.
Reimportation: Lawmakers are still debating whether to allow U.S. residents to purchase medications from Canada and other industrialized nations, where they are often cheaper. The proposal has "broad ... support" from the public, but it is opposed by the pharmaceutical industry and by some lawmakers and federal health officials, who say the issue raises safety concerns (AP/St. Louis Post-Dispatch, 10/26).
Incentives for employers: Lawmakers also are considering ways to encourage employers to continue offering retiree prescription drug coverage if a Medicare drug benefit is enacted.
Payments for current covered medications: Conferees are still debating a new payment system for drugs administered in doctors' offices.
Price controls: Negotiators are looking into whether the federal government "should open the door to exerting pressure on drug makers to hold down prices," the Minneapolis Star-Tribune reports (O'Rourke, Minneapolis Star-Tribune, 10/27).

Competition Provision

The House-passed competition provision, under which traditional, fee-for-service Medicare would begin to compete directly with private health plans in 2010, also remains one of the primary obstacles to reaching a final agreement, the Knight Ridder/Charlotte Observer reports (Kuhnhenn, Knight Ridder/Charlotte Observer, 10/25). The provision also calls for premiums under traditional Medicare to be determined by competition with private health plans, rather than by a fixed formula. According to some Democrats, such a proposal would cause fee-for-service Medicare premiums to rise and would prompt healthier beneficiaries to join private plans, leaving beneficiaries who are sicker in traditional Medicare (California Healthline, 10/24). But advocates of the competition provision say that without it, Medicare costs will increase, considering the expense of the new drug benefit. Lawmakers and lobbyists on both sides of the issue say that although "it is hard to imagine the entire bill coming undone now," the competition provision "could be the thread that unravels it," according to the Knight Ridder/Observer (Knight Ridder/Charlotte Observer, 10/25). Some Republicans have said they will not vote for the final bill unless it contains the competition provision (Pear, New York Times, 10/25). On Friday, Sen. Max Baucus (D-Mont.) said that the provision would "likely have to be dropped" for the conference to reach agreement on a final bill, CongressDaily reports. "The 800-pound gorilla has not been wrestled to the floor," he said (Heil/Wegner, CongressDaily, 10/24). The New York Times reports that the Congressional Budget Office has estimated that the House-passed competition provision would save less than $1 billion between 2010 and 2013. CMS Administrator Tom Scully said earlier this year, "Philosophically, you could make a good argument [for the competition provision]. But -- and this is where we become concerned -- it could potentially impact premiums, and we are very concerned about protecting premiums to make sure they don't go up" (New York Times, 10/25).

Drug Benefit

Although many issues still must be resolved, conferees have reached agreement on several "contentious items," including a general outline of the prescription drug benefit, which would be provided by private insurers, according to Knight Ridder/Observer (Knight Ridder/Charlotte Observer, 10/25). Under the tentative agreement on the drug benefit, the federal government would pay 75% of beneficiaries' drug costs up to $2,200 per person per year. Beneficiaries would pay a $275 deductible and average monthly premiums of $35. Beneficiaries whose drug costs exceed the $2,200 annual cap would pay out of pocket for their drug costs from that point until about $3,600, when catastrophic coverage would begin. After that point, the beneficiaries would have to pay 5% of the cost of each prescription or a copayment of $5 to $10 for each prescription. Beneficiaries with incomes below 135% of the poverty level would not have to pay the premiums or deductible but would contribute a $2 copay for each generic drug and $5 for each brand-name drug until their overall drug costs reached $5,000; Medicare would fully cover drug costs after that point. Beneficiaries with incomes between 135% and 150% of the federal poverty level would pay a $50 deductible, reduced premiums based on a sliding scale related to income and 15% of the cost of each prescription until their out-of-pocket costs reach $3,600. Beneficiaries with assets of more than $10,000 would not be eligible for subsidies, regardless of their income level (California Healthline, 10/24).

Thomas Says Premiums Will Rise

Following Friday's negotiating session, Thomas said that Medicare beneficiaries will have to shoulder more of their future health care costs if the program "is to remain solvent," the Los Angeles Times reports. He said that adding a prescription drug benefit to Medicare without implementing cost-control measures would be "fiscally irresponsible." He added that negotiators are likely to implement measures to control costs, including relating Medicare Part B premiums to beneficiaries' incomes and requiring traditional Medicare to compete with private plans (Kemper, Los Angeles Times, 10/25). Thomas added that without a "comparative cost adjustment mechanism" to hold down costs, a final bill would not pass the House, the New York Times reports. Medicare spending totals more than $270 billion per year and is expected to grow by 90% in the next 10 years, according to the New York Times (New York Times, 10/25).

Additional Coverage

The following summarizes additional coverage related to Medicare negotiations.

CongressDaily/AM: The "animosity" between Sen. Charles Grassley (R-Iowa) and Thomas has continued as Medicare negotiations progress, CongressDaily/AM reports. The two lawmakers have "competing policy concerns on Medicare"-- particularly over the House-passed competition provision -- and the conference committee negotiations have "been punctuated with outbreaks of friction between the two men," according to CongressDaily/AM. A spokesperson for Thomas said that concerns over the lawmakers' relationship might be overstated and that their differences "ultimately have had little impact on their ability to complete work on major bills," CongressDaily/AM reports (Stanton, CongressDaily/AM, 10/27).
NPR's "All Things Considered": The program on Sunday reported on progress in the Medicare negotiations (Rovner, "All Things Considered," NPR, 10/26). The full segment is available online in RealPlayer.
New York Times: The Times on Sunday examined how Republican leaders have been increasingly using small groups of conference committee members to resolve differences between House- and Senate-passed bills, including the Medicare legislation. Although a total of 17 lawmakers are on the Medicare conference committee, only 12 are involved in the core negotiations, and "[m]ost of the Democrats ... have been excluded," according to the Times. Republicans said they concentrated negotiations among a core group of Republicans because it "would be easier to make law that way," but Senate Minority Leader Tom Daschle (D-S.D) said he had "grave reservations about the way" that Republicans are using conference committees, the Times reports (Pear/Hulse, New York Times, 10/26).
Washington Post: The Post on Monday examined how the Medicare debate will reflect on the "first session of the 108th Congress." If Congress passes the energy and Medicare bills currently being debated, this congresional session will likely "be regarded as a productive one that addressed some of the nation's top domestic concerns," according to the Post. But the record "will look spotty at best" if the measures -- particularly the Medicare legislation -- fail, the Post reports. Senate Majority Whip Mitch McConnell (R-Ky.) said he is "very confident" that both bills will pass. But Sen. Kent Conrad (D-N.D.) said that regardless of whether the two bills pass, the major accomplishment of this session will be to "dig the county in a deep hole, jeopardizing Social Security and Medicare" (Dewar, Washington Post, 10/27).

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