Democrats in congress prepare for a major battle next year over Medicare coverage changes
29 10 08 - 12:55
Medicare Battle Looms as Costs Keep Climbing
Democratic lawmakers in Congress are girding for a major battle over Medicare next year that could result in substantial changes, including cuts in payments to private insurers that offer Medicare coverage and a new right for the federal government to negotiate drug prices.
No matter who is elected to the White House and Congress, pressure to act on Medicare is rising as the program grabs a growing share of the federal budget. Medicare spending hit $431.5 billion last year, nearly doubling in just seven years, according to the trustees of the Medicare trust funds.
Sens. John McCain and Barack Obama both say they won't reduce Medicare benefits -- a sensitive topic for older voters -- but say they favor adopting better technology and boosting the use of generic drugs. Sen. McCain also supports making wealthier beneficiaries pay more out of pocket for their Medicare drug benefit.
A key question in Congress, where polls show Democrats gaining seats in next week's election, is whether Medicare will be dealt with alone or as part of a wider health-care overhaul. Both presidential candidates have proposed ambitious plans that they say would expand coverage for the uninsured, but the rising federal budget deficit will present barriers to new spending.
At a minimum, Congress is expected to address a scheduled cut in doctors' fees for Medicare that would take effect at the end of 2009. In recent years, Congress has repeatedly adopted temporary fixes to block these cuts, which are based on an automatic formula.
This time the fee issue could open up opportunities for Democrats to make deeper changes to the program, which provides coverage for Americans 65 and over as well as the disabled. The Bush administration's Medicare policy focused on fostering competition between private businesses, an approach that may be out of step with the mood in Washington in the wake of the financial crisis.
About 9.4 million people, or 21% of all Medicare beneficiaries, are enrolled in private Medicare Advantage plans, according to a June report from the Medicare Payment Advisory Commission, an independent congressional agency. In Medicare Advantage, people receive their benefit through a private insurer instead of directly from the government. The commission projected that 2008 payments to the private plans would be 13% higher than what the government would have spent on direct coverage, resulting in about $10 billion of extra government spending.
Neera Tanden, a top Obama policy adviser, said the Democratic candidate wants to reduce payments to the private insurers to match the cost of government-provided traditional Medicare.
Douglas Holtz-Eakin, Sen. McCain's senior policy adviser, said the Republican opposes cuts to Medicare Advantage as a "rifle shot" done alone, but could support trims "in the context of a comprehensive reform" of the health-care system.
The Medicare prescription-drug benefit, which took effect in 2006, was supported by President George W. Bush and Democrats, but it contains one provision that many Democrats want to change -- the rule barring the government from using its buying power to bargain directly with pharmaceutical companies over drug prices.
Addressing the doctor-fee question, adopting new technology and other Medicare issues are "all things that have been hanging around that we should get done," said Rep. Pete Stark, a California Democrat who is chairman of the House Ways and Means health subcommittee. Sen. Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, will try to advance an overhaul next year.
Write to Anna Wilde Mathews at anna.mathews@wsj.com