2003-08-27 -- Congress squabbling over Medicare Restructuring


The effort by business and government to restrict future Medicare
expenses by privatizing it, all under the guise of a prescription
benefit, appears is in dire straits because of internal
contradictions.

Meanwhile, The Congressional Budget Office on Aug. 26 estimated that
the federal budget deficit in fiscal year 2005 will be $480 billion,
not including tax cut bills and a Medicare prescription drug benefit,
the Wall Street Journal reports. The CBO estimates that the federal
deficit would grow by an additional $1.6 trillion over the next decade
if tax cut bills pending in Congress are passed and by another $400
billion if Congress passes a Medicare prescription drug benefit.
Democrats said that the Bush administration's support of tax cuts and
a Medicare prescription drug benefit would "wipe out any hope of
balanced budgets" in the near future, the Atlanta Journal-Constitution
reports. The CBO's deficit projection comes as approximately 75
million baby boomers are nearing retirement age, which is likely to
reduce income tax revenues and increase costs for Medicare and Social
Security.


From the Kaiser Daily Health Policy Report, Wednesday, August 27, 2003


Groups Express Opposition to Bills

Calling the House and Senate Medicare bills "fiscally irresponsible"
and potentially "harmful to many seniors," a coalition of more than 20
conservative and fiscal watchdog groups on Aug. 26 asked that
lawmakers discard the current plans and start anew, the Washington
Times reports.

According to the Times, members of the coalition said that the bills
would "create a huge financial burden" on the federal government that
would result in higher taxes and would cause many seniors to lose the
private drug coverage they already have.

"The prescription drug entitlement is an ill-considered proposal that
ought to carry an interaction warning for seniors and taxpayers," John
Berthoud, president of the National Taxpayers Union Foundation, said.
Robert Moffitt, a policy analyst for the Heritage Foundation, noted
that the Congressional Budget Office and others estimate that 70% of
Medicare beneficiaries already have drug benefits and said that the
bills could encourage employers to drop retiree drug coverage. Moffitt
said, "There is no evidence ... that there's any need for a universal
drug benefit. Do we want to replace existing largely private-sector
drug coverage with a government entitlement?" Stephen Moore, president
of the Club for Growth, said his group is working with Rep. Patrick
Toomey (R-Pa.) on a letter from conservatives stating they will vote
against any bill that does not include certain "key reforms,"
including cost containment, the Times reports (Fagan, Washington
Times, 8/27).

A group of unions and consumer groups on Aug. 26 also said that they
want lawmakers to make "substantial improvements" to the current
Medicare bills or "allow them to die" in conference committee, the
Hartford Courant reports. Ed Coyle, executive director of the Alliance
for Retired Americans, said that the unions and consumer groups his
organization represents oppose both the House and Senate Medicare
bills because they would lead to increased privatization. The ARA has
scheduled a Sept. 4 rally in Washington, D.C., to lobby for changes in
the bills or to defeat them altogether (MacDonald, Hartford Courant,
8/27).


New York Times, Wednesday, August 27, 2003

Bill on Medicare Drug Benefit Is Stalled by House-Senate Republican
Disagreement

By ROBERT PEAR

WASHINGTON, Aug. 26 - Congressional aides trying to write a bill
providing drug benefits to millions of elderly people said today that
their work had been stalled by growing disagreements and antagonism
between the top Republican negotiators from the Senate and the House.

For the second day this week, aides to Senator Charles E. Grassley,
Republican of Iowa, the chairman of the Finance Committee, boycotted
talks on the prescription drug bill.

The aides said Mr. Grassley was distressed that House Republicans had
refused to discuss certain major provisions of the Senate and House
bills that would increase Medicare payments to hospitals and doctors
in rural areas, including parts of Iowa.

The agenda for the talks was set by Representative Bill Thomas,
Republican of California, the chairman of the Ways and Means
Committee. Aides to Mr. Thomas are presiding over the talks.

Mr. Grassley and Mr. Thomas have had tense relations for several
years. The tension flared in May, when they clashed over legislation
cutting taxes. Mr. Grassley complained that Mr. Thomas, known for his
sharp tongue, "ought to show a little more respect to a person of
equal rank."

The House and Senate passed different versions of the Medicare bill in
June. A 17-member conference committee is trying to iron out
differences. Lawmakers have left town. Aides to the conferees have
been working through August in hopes of achieving a compromise. But
agreements have been elusive, even on issues listed as
noncontroversial.

Christin Tinsworth, a spokeswoman for Mr. Thomas, said he too favored
assistance to rural health care providers, but took "a more global
view" of the legislation. Unfortunately, Ms. Tinsworth said, for the
last two days, "Senator Grassley's staff was not at the table."

An aide to Mr. Thomas, clearly exasperated, said: "Senator Grassley
did not even call Mr. Thomas to seek a remedy to his rural concern
before he pulled his staff. There was no effort on Grassley's part to
resolve the issue before his staff walked out."

A Senate Republican leadership aide said: "This is a decision that
Senator Grassley made on his own. He and Mr. Thomas both have
legitimate concerns. We hope this proves to be a minor bump in the
road."

Mr. Grassley is running for re-election and has made clear that
increasing payments to rural health care providers is a top priority.

The Des Moines Register, the state's largest newspaper, has published
many editorials advocating an increase in Medicare payments to rural
hospitals. But the editorials have criticized the underlying
prescription drug bill as "worse than nothing," saying it "will offer
little or no help for most seniors."

Senator Grassley and other lawmakers from rural states are seeking
"geographic equity" in Medicare payments, but the issue is bigger than
that. Mr. Thomas, on behalf of the House, is also trying to slow the
growth in Medicare payments to hospitals. The Congressional Budget
Office says the House bill would cut projected Medicare payments to
hospitals by $12 billion, or slightly less than 1 percent, in the
coming decade.

Hospitals across the country have mobilized a lobbying campaign to
block the cuts, which would offset about half the value of any special
assistance to rural hospitals.

"The House gives with one hand and takes away with the other hand,"
said Thomas P. Nickels, senior vice president of the American Hospital
Association.

Hospitals blocked an effort by Mr. Thomas to cut their Medicare
payments last year. They said their costs for labor, new technology
and blood products were all rising.

Urban hospitals, including teaching hospitals, generally prefer the
Senate bill. Hospitals in New York State would gain $509 million under
the Senate bill, but would lose $439 million under the House measure,
the hospital association said.

On Aug. 5, Mr. Thomas announced a "tentative agreement" on details of
a drug discount card that could be issued to Medicare beneficiaries
next year, to provide some immediate assistance, until Medicare drug
coverage begins in January 2006.

But today the companies that would issue such cards for the government
said the enrollment fee - $25 or $30 a person - would probably not be
enough to cover their costs.

"How will they make money?" asked Steven C. Jenning, a health care
lobbyist. "They need additional Medicare payments to get up and
running."

The companies would have to negotiate discounts with drug
manufacturers, establish networks of retail pharmacies and keep track
of drug spending by millions of Medicare beneficiaries.