Democratic Lawmakers, Obama Likely To Seek Changes To Medicare Advantage, Medicare Prescription Drug Benefit

Main Category: Medicare / Medicaid / SCHIP
Article Date: 16 Dec 2008 - 5:00 PDT

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Democratic lawmakers and President-elect Barack Obama in 2009 likely will seek to reduce reimbursements to private health insurers under Medicare Advantage and make changes to the Medicare prescription drug benefit, the Wall Street Journal reports.

According to the Journal, reimbursements for MA plans are 13% higher than payments for the Medicare fee-for-service program for equivalent benefits, and the extra payments are "long-sought targets" for Democratic lawmakers, who in the past have attempted to reduce them to fund other efforts, such as an expansion of SCHIP. Senate Finance Committee Chair Max Baucus (D-Mont.) that said he seeks to reduce such "overpayments" as part of his health care reform proposal. In addition, Obama during his campaign said that he supports a reduction in "excessive subsidies" to MA plans.

Democratic lawmakers "also are aiming to change elements" of the Medicare prescription drug benefit, such as the so-called "doughnut hole" coverage gap, the Journal reports. In addition, House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.), Obama and others have said that they will seek to allow the federal government to negotiate directly with pharmaceutical companies for prices under the program (Zhang, Wall Street Journal, 12/13).

Opinion Piece
"Unless the risk pool for Medicare grows and is strengthened to include millions of younger, healthier workers, their families and their kids, Medicare as we know it could die of old age," columnist Saul Friedman writes in a Long Island Newsday opinion piece. He adds, "And with out-of-pocket costs soaring and people leaving Medicare" for private MA plans, the Congressional Budget Office has "warned that original Medicare is in danger of becoming another private insurance plan."

Friedman recommends passage of a bill (HR 676) sponsored by Rep. John Conyers (D-Mich.) that would expand Medicare to all U.S. residents, "absorb such programs as Medicaid, SCHIP, and be paid for by taxes and premiums." The bill would "save $300 billion a year in administrative costs, for it would deny insurance companies a role," Friedman writes, adding, "Getting over that hurdle may be why HR 676 has gotten so little publicity." According to Friedman, the bill might "not pass, but it should have a place in the coming discussion" (Friedman, Long Island Newsday, 12/13).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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