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Medicare Pay Cut Bill Divides GOP

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As Senate lawmakers prepare this week to tackle Democratic legislation to avert cuts to Medicare doctors, Republican leaders who oppose the bill face an unexpected challenge: abandonment by most House colleagues.

The bill has taken on a partisan air because the funding to prevent the physician pay cut would come largely by slicing a controversial program that delivers Medicare services through private insurance plans — an initiative long popular with the Bush administration and congressional Republicans.

But in a shocking vote last month, the House approved the Democrats’ bill by a veto-proof 355 to 59. Defying the GOP leadership, 129 Republicans supported the proposal. Senate Republicans held their ground a few days later, killing the bill by a slim one-vote margin. But the House defections — as well as intense lobbying by physicians’ groups over the Fourth of July recess — have put additional pressure on Senate Republicans as the upper chamber takes up the bill again this week. The vote could come as early as Wednesday afternoon.


Illustration by: Matt Mahurin

The House-versus-Senate dynamic is unusual from Republican lawmakers renowned for party unity. But with the GOP facing an ominous election cycle this year — and with President George W. Bush tallying the lowest approval ratings in history — many Republicans in tight races are taking a go-it-yourself attitude for their own job preservation.

Among the House Republican defectors, health policy experts say, the fear of being portrayed as harming Medicare patients trumped their support for the private insurance program — called Medicare Advantage. Faced with a decision between party loyalty and preserving their political hides, many chose the latter.

“Why did they run to vote for the Medicare bill like brides at Filene’s wedding dress sale?” Alexander Vachon, a Washington-based health-policy analyst, said in an email. “The obvious reason: Because they have to be reelected.”

Senate Republicans are hardly immune to the trend. Indeed, five of the nine Republican senators who supported the Medicare bill last month face tough reelection bids this year. For some of the others, the political cost is already tangible.

In Texas, for example, the political arm of the Texas Medical Assn. pulled its reelection endorsement for first-term Republican Sen. John Cornyn in the wake of his vote against the bill. In California, Rep. Wally Herger (R) received so much flak from physicians that he immediately penned a letter explaining that he would, of course, have voted for the bill if he’d known it would pass.

“[I]f the bill comes back to the House for final approval, I intend to fully support it,” Herger wrote the same day he voted against it.

But whether that pressure will be enough to alter the strategy of Senate Republicans this week remains to be seen. Robert Blendon, professor of health policy at Harvard University, said that voters’ memories are short, leaving most Republican senators immune to the current pressures surrounding the Medicare bill. “Voting against it is not ideal if you’re up for re-election,” he said. “But if you’re not up for re-election, it’s not a story that’s going to stick around for years.”

Congress left Washington last month without blocking the scheduled 10.6 percent cut for physicians who treat seniors and the disabled under Medicare. That cut arrived July 1. The White House postponed any cut while Congress haggles over a compromise. But that moratorium ends on Friday. The impasse could carry drastic implications — with some physicians threatening to drop services to Medicare patients if the cut remains.

At issue, however, is not whether the cut should be prevented, but how it should be offset. The Medicare Advantage program has enjoyed intense support from the Bush administration and congressional Republicans, who favor a larger role for private industry within the enormous federal health-care program. Bush has threatened to veto any significant cuts.

But Democrats, seniors groups and patient advocates have skewered Medicare Advantage as a giveaway to insurance companies at the expense of limited Medicare resources. The insurance industry says the extra costs are necessary to deliver extra services, like dental care not covered under traditional Medicare. But advocates say the federal government could provide the same care for much less. A number of independent cost analyses support the advocates’ claims.

Reports from the Congressional Budget Office, for example, demonstrate that delivering services through the private plans costs, on average, about 12 percent more than delivering the same services through the regular program. Last year, the CBO estimated that capping Medicare Advantage payments at 110 percent of traditional Medicare costs would save $38 billion over five years and $95 billion over 10.

“We just feel we have to rein in the outrageous subsidies to the insurance industry,” said Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare, a liberal advocacy group.

However the Senate votes this week, Bush’s veto threat predicts the sides will be forced to reach some compromise over the Medicare Advantage cuts. Senate Finance Committee leaders Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) had been concocting a compromise bill last month, that likely would have spared much of the Democrats’ proposed Medicare Advantage cuts. But those negotiations ended following the surprising results of the House vote. “Frankly, we did not have an agreement,” Baucus told reporters Monday, adding that the lopsided House vote “changed the dynamics dramatically.”

In any event, Congress will be returning to the issue next year — at the latest. The bill under consideration prevents physicians’ cuts only through 2009, and a compromise might provide an even shorter fix. In the eyes of many observers, it’s high-time Congress got to the root of the problem.

“Kicking it down the road six months or a year at a time just brings uncertainty to the whole process,” said Joseph Antos, a health-policy analyst at the conservative American Enterprise Institute. “Just a little honesty would help every once in a while.”

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