Congress Weighs Big Cuts to Medicaid and Medicare - New York Times
The New York Times

October 30, 2005

Congress Weighs Big Cuts to Medicaid and Medicare
By
ROBERT PEAR

WASHINGTON, Oct. 29 - Congressional committees have proposed substantial
cutbacks in Medicaid and Medicare, the nation's largest health insurance
programs,
which together cover more than one-fourth of all Americans.

The two houses of Congress are expected to approve the changes in the next
two weeks as part of competing bills to slow the growth of federal spending.
Negotiators from the two chambers would then try to work out the
differences.

The House bill would take all of its savings from Medicaid, the program for
low-income people, while leaving Medicare, the program for those 65 and
older
and the disabled, untouched, as the Bush administration wants. By contrast,
the Senate bill would squeeze savings from both programs.

Under the House bill, states would gain sweeping authority to charge
premiums, increase co-payments and trim benefits for Medicaid recipients, so
benefit
packages would look more like the private insurance provided by employers.

The Congressional Budget Office estimated that these changes would save the
federal government more than $4 billion in the next five years, with savings
of more than $3 billion for the states.

Governors of both parties, troubled by the soaring cost of Medicaid, have
been pleading with Congress to let them make such changes. They said their
record
on welfare showed they could be trusted with the new authority.

Under the current Medicaid law and rules, co-payments for most adults cannot
exceed $3 for goods and services like prescription drugs and visits to
doctors.

The House bill, drafted by Representative Joe L. Barton, Republican of
Texas,
would gradually increase the maximum co-payment, to $5 in 2008. In later
years, the ceiling would rise automatically, to match increases in the
consumer
price index for medical care.

States could end coverage for Medicaid recipients who refused to pay
premiums, and health care providers could deny services to those who failed
to pay
the new charges. Poor children under 18 years old would be exempt from
cost-sharing requirements.

"I trust the states," said Mr. Barton, the chairman of the Committee on
Energy and Commerce.

Representative Nathan Deal, Republican of
Georgia,
said, "If people have a personal stake in the cost of their health care,
they will use it more responsibly."

But Representative Tammy Baldwin, Democrat of
Wisconsin,
said, "Higher co-payments will lead people to forgo needed medical care."

"To listen to some of the personal responsibility arguments," Ms. Baldwin
said, "one might think that people line up to see their doctors the way they
line
up to see a rock concert or sporting event, and the only way to control this
irrational hunger or thirst for medical care is to make it more expensive.
I just don't buy that."

Federal auditors and investigators have repeatedly found that Medicaid
overpays pharmacies. The Senate and House bills would reduce those payments.
The
Senate bill would also require drug manufacturers to give larger discounts
to Medicaid, a provision not included in the House bill.

Craig L. Fuller, president of the National Association of Chain Drug Stores,
a trade group, said he did not understand how House Republicans could cut
payments
to pharmacies and increase co-payments for poor people without requiring
drug manufacturers to make any contribution to the savings.

But Billy Tauzin, president of the Pharmaceutical Research and Manufacturers
of America, a lobbying organization for brand-name drug companies, said the
price concessions required by the Senate bill could hurt Medicaid recipients
and other patients by forcing drug makers to "reduce research and
development
of life-saving medicines."

The White House has told lawmakers that they should not tamper with
Medicare. President Bush does not want Congress to alter the prescription
drug benefit,
scheduled to take effect Jan. 1, or other provisions of the 2003 Medicare
law.

House Republican leaders followed that advice, but the Senate did not. The
Senate Finance Committee voted to eliminate a $10 billion fund that can be
used
to increase payments to private insurers, as an incentive for them to enter
and stay in the Medicare program.

The committee chairman, Senator
Charles E. Grassley,
Republican of
Iowa,
said the money was not immediately needed because private plans were rushing
into Medicare.

The Medicare Payment Advisory Commission, an independent federal panel, has
urged Congress to eliminate the $10 billion fund, saying it gives an unfair
advantage to plans known as regional preferred provider organizations, or
P.P.O.'s.

Karen M. Ignagni, president of America's Health Insurance Plans, an industry
trade group, said, "This fund has been described as a slush fund by critics,
but the reality is that beneficiaries, not health plans, will be helped by
this funding."

With the extra payments, Ms. Ignagni said, more insurers would offer
low-cost, high-quality benefits to people in rural areas and other markets
where such
options were unavailable.

The Blue Cross and Blue Shield Association warned Congress that if it
eliminated the $10 billion fund, it would show that "the government is an
unreliable
business partner." Blue Cross lobbyists said this would cause some insurers
to reconsider their participation in Medicare.

POsted by Miriam V.