HR 3200: The House Health Care bill. Wed, 07/15/2009 -- This is all we have right now to truly know what the left has planned. Please read it for yourself -- House's 815-page draft became a 1018-page bill.
Health Care Daily Report
Volume: 14 Number: 37February 27, 2009Medicare, Medicaid Cuts in Obama Budget Total $316 Billion Over 10 Years
President Obama's fiscal year 2010 proposed budget relies on substantial payment reductions in Medicare and Medicaid to pay for a $634 billion reserve fund for health reform, including large spending reductions for Medicare managed care plans, according to budget documents released by the White House Feb. 26.
The proposed budget includes $633.8 billion over 10 years for a health care reserve fund, paid for equally by increasing taxes on families earning more than $250,000 and individuals earning more than $200,000 annually and a series of Medicare and Medicaid policy changes.
The savings in Medicare and Medicaid proposed by Obama would total $316 billion over 10 years.
The reserve fund will be used to help pay for health care reform; the White House believes more money will be needed to fully implement reforms.
The White House released a summary document on the budget Feb. 26. Obama's complete budget proposal is expected to be released in April.
Crushing Health Care Costs.
“Because of crushing health care costs and the fact that they drag down our economy, bankrupt our families, and represent the fastest-growing part of our budget, we must make it a priority to give every single American quality, affordable health care,” Obama said Feb. 26.
“That's why this budget builds on what we have already done over the last month to expand coverage for millions more children, to computerize health records to cut waste and reduce medical errors, which save, by the way, not only tax dollars, but lives,” the president said.
“With this budget, we are making a historic commitment to comprehensive health care reform,” he added. “It's a step that will not only make families healthier and companies more competitive, but over the long term it will also help us bring down our deficit.”
MA Payment Reductions.
A large chunk of the savings from Medicare would come from introducing a competitive bidding system for Medicare Advantage (MA) plans in which plan payments would be based on an average of plans' bids submitted to Medicare, according to the budget. This change would save $176.6 billion over 10 years, it said.
An industry official told BNA Feb. 26 that managed care plans have been expecting for some time that their Medicare payments would be reduced, adding that despite the reductions, plans will continue supporting health care reform. Of more concern to plans is talk by congressional Democrats of creating a public plan option in health reform that would compete with private plans, the official said.
Plans are expected to fight to keep managed care payments higher in rural and low-payment areas, according to the official, who requested anonymity. The official said the MA payment reductions will eliminate the policy of some plans offering zero premium coverage to beneficiaries.
America's Health Insurance Plans Feb. 26 said the spending reductions “would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system.”
AHIP said “[a] cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.”
Medicare managed care plans are paid as much as 17 percent more than fee-for-service providers, according to the Medicare Payment Advisory Commission. Democrats have long proposed significantly reducing those payments, while plans and most Republicans believe that MA plans provide needed coverage for low-income and minority beneficiaries.
Enzi to Fight Reductions.
Senate Health, Education, Labor, and Pensions Committee ranking member Michael B. Enzi (R-Wyo.) said Feb. 26 he would work to prevent MA reductions from becoming law.
“We should not pay for health care reform by slashing programs and eliminating choices,” Enzi said. “The President said repeatedly during his campaign that Americans who like the health insurance they have would keep their existing plans in his Administration. His budget proposal undercuts that promise.”
Other Medicare providers that would experience payment reductions would be home health agencies, which would see their reimbursement cut about $37 billion over 10 years. The budget would eliminate the home health inflation update for 2010.
The budget also includes numerous changes to Medicare hospital payment policies. For example, it would create hospital quality incentive payments, reducing program spending by about $12 billion over 10 years.
It also would implement policy to reduce hospital readmission rates, saving $8.4 billion over 10 years, and bundling some post-acute care payments, saving $17.8 billion, according to the budget blueprint.
Fixing Physician Payment System.
The budget also assumes that Congress will fix permanently Medicare's physician payment system, and the White House has put nearly $330 billion over 10 years in its budget baseline for that purpose.
But the White House said it would support “comprehensive, but fiscally responsible reforms to the payment formula. The administration believes Medicare and the country need to move toward a system in which doctors face better incentives for high-quality care rather than simply more care.”
The American Medical Association said in a Feb. 26 statement that it supports this approach.
“President Obama's budget proposal takes a huge step forward to ensure that physicians can care for seniors by rejecting planned Medicare physician payment cuts of 40 percent over the next decade,” AMA said.
“Looming widespread physician shortages coupled with aging baby boomers highlight the urgent need for permanent Medicare physician payment system reform to preserve seniors' access to health care,” the association said.
Physicians' Medicare reimbursement is scheduled to be reduced 20 percent in 2010 unless Congress intervenes.
The budget also contains a line item noting it would address “financial conflicts of interest in physician specialty hospitals,” although no savings figure was listed.
Congressional Democrats have been trying to pass legislation closing what they have called a loophole in the physician self-referral law (known as the Stark law) that allows doctors to refer Medicare patients to hospitals in which they have ownership interests.
Drug Rebate Changes.
The budget also would increase the Medicaid drug rebate for brand-name drugs from 15.1 percent to 22.1 percent of the average manufacturer price and apply the additional rebate to new drug formulations. It also would allow states to collect rebates on medications provided through Medicaid managed care plans, the budget said. Those provisions would save about $19.5 billion over 10 years, the budget said.
Congressional reaction to the budget fell along party lines.
“By dedicating substantial funding--and starting the dialogue about how to pay for it--the President shows he's serious about health care reform as a top, immediate priority,” Sen. John D. Rockefeller IV (D-W.Va.) said in a Feb. 26 statement.
“Congress shares that urgency,” Rockefeller said. “We've begun putting proposals together and are ready to work with the President's health team to move forward. Making health care affordable and accessible for all Americans is an essential part of fixing our economy--it is not a side priority. We must chart a new course immediately.”
The budget is paving the way “for comprehensive health reform to expand coverage and address skyrocketing health costs that threatens access for those with insurance and prevents tens of millions of Americans from getting the care they need,” added House Ways and Means Chairman Charles B. Rangel (D-N.Y.). “By strengthening existing programs, we can lay a foundation for reform to ensure that everyone has access to affordable care that meets their needs.”
Senate Finance Committee Chairman Max Baucus (D-Mont.) said in a Feb. 26 statement that the budget blueprint indicates “a clear commitment to action this year with an important and historic down payment on reform. We can and must achieve comprehensive health care reform this year, and this budget gives us a launching pad to move forward.”
Republicans pledged to work with Obama in crafting health reform legislation, but said increasing taxes is the wrong way to attack the issue.
“Republicans and Democrats need to work together to expand access to quality, affordable health care for all Americans, but increasing taxes during an economic recession, especially on small businesses, is not a responsible way to accomplish this goal,” House Minority Leader John A. Boehner (R-Ohio) said in a Feb. 26 statement.
“Republicans agree with President Obama: America's health care system is in dire need of reform,” House Republican Whip Eric Cantor (R-Va.) said.
“Unfortunately, the health reform principles presented today rely on old-style spending increases and government-knows-best approaches which have historically failed to achieve better outcomes at lower costs,” Cantor said. “Republicans believe we should focus on preserving patients' options for their care while ensuring that doctors are free to make critical decisions without interference from restrictive government policies.”
AARP announced Feb. 26 it is launching another phase in its push for health care reform in which members are visiting state offices of members of key congressional committees to lobby for congressional action on the issue.
“The president's budget plan includes an important down-payment on health care reform,” the seniors' lobby said. “As he said, however, he will need bipartisan action from Congress this year to get the whole job done. It's time for Congress to put its own solutions forward.”
In a related area, Obama said Feb. 26 that funding under the economic stimulus law (Pub. L. No. 111-5) to help workers who lost their jobs maintain their health insurance is now available.
The law includes $24.7 billion to help workers maintain their health insurance under the Consolidated Omnibus Budget Reconciliation Act (COBRA), which Obama said would help about 7 million workers.
The law provides a 65 percent subsidy for nine months to help workers who have lost their jobs keep their COBRA coverage.
The budget document is available on the Web at http://www.whitehouse.gov/omb/budget.
Government’s only tool is force, and force is usually the worst possible tool to apply in social matters.