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Associated Press: Democrats Target GOP's Medicare Changes

By David Espo

WASHINGTON -- House Democrats are launching a drive this week to roll back years of Republican changes to Medicare, aiming to dramatically scale back federal subsidies to HMOs that cover millions of seniors.

The same legislation contains several provisions to bolster traditional Medicare, sweetening the payment system for doctors, promising free colon cancer screening for all beneficiaries and injecting new funding to defray costs for the low-income.

Rep. Fortney (Pete) Stark, D-Calif., the bill's principal author, dismissed Republican claims that the measure would destroy the private Medicare plans that insure eight million seniors. 'It eliminates the subsidy' that raises the government's cost higher than it is under traditional Medicare, he said. 'If they (HMOs) can't make it at 100 percent of fee-for-service, they obviously shouldn't be in business.'

Ironically, in their first major Medicare measure since taking power in January, Democratic House leaders call for relatively few changes in a controversial, stand-alone prescription drug program now in its second year.

Despite repeated complaints that pharmaceutical companies are favored over patients, the legislation as drafted does not narrow a gap in coverage known as a donut hole.

The Medicare provisions are largely overshadowed by other elements in the measure that would expand a federal program of health care coverage for lower-income children. A vote is scheduled later in the week.

President Bush has threatened to veto a less sweeping children's health bill in the Senate. And the two issues combined _ coverage for children and for seniors _ reflect the deep health care divide between Democrats, who generally favor greater government involvement in health care, and Republicans, who promote private alternatives.

In the case of Medicare, Republicans have long favored encouraging insurance companies to offer coverage to seniors, often with benefits unavailable in the traditional government-run program.

According to the government's most recent statistics, more than 8 million beneficiaries are enrolled in these managed care programs, or about 18 percent of the total Medicare population. Congressional experts predict the total will reach 22 percent by next year.

Largely as a result of legislation enacted while Republicans controlled Congress, the government pays an estimated $112 per recipient in managed care for every $100 it pays for traditional coverage.

The legislation would gradually eliminate the difference in payments over the next decade, with the first impact coming in the fall of 2008. According to early drafts of the legislation, the government savings would total $50 billion over five years and $157 billion over 10.

In addition, the legislation limits the cost for any individual service under private Medicare, ensuring that no patient pays more in out of pocket expenses than they would have paid under traditional Medicare.

Republicans say the effect would be to decimate the private-market alternative to government coverage.

'Medicare advantage would be destroyed,' said Rep. David Camp of Michigan, the senior Republican on the subcommittee Stark chairs. 'In some states there would be no Medicare Advantage at all according to testimony before our committee.'

In an interview, he said Democrats were cutting managed care Medicare to pay for an expansion of coverage for low-income children, a trade-off he called 'their first step to universal, government-run health care.'

'I think beneficiaries are not going to be confused,' said Karen Ignagni, president of the American Health Insurance Providers, an industry group. 'This is a safety net issue for them.'

And one prominent Democratic pollster, Mark Mellman, has cautioned in a recent memo that seniors 'overwhelmingly oppose cuts' to either traditional or private-run Medicare.

'Seniors will punish members who vote for Medicare cuts at the polls,' he wrote.

If House Democrats are concerned about political repercussions, they haven't shown it.

A seven-page packet recently distributed to first-term Democrats stressed that the legislation would eliminate 'the HMO slush fund and overpayments, funded with taxpayer dollars,' head off a looming 10 percent cut in doctor payments and extend the solvency of the Medicare trust fund by two years.

While Democrats sound confident they can succeed in passing the legislation through the House, its fate in the Senate is less clear.
Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, chose to pay for expanded children's health care solely by raising the tobacco tax, and contains none of the Medicare changes in the House measure.

And while numerous Democrats said they expect some changes to emerge eventually in a compromise bill, support for Medicare advantage in the Senate is stronger than in the House.