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September 28, 2009

Washington Health Policy Week in Review Archive 5ef1b7e6-9f89-44a2-bab8-2d78fffdf83e

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House Passes Bill to Avert Medicare Premium Increase

By David Clarke, CQ Staff

September 24, 2009 -- The House on Thursday passed a bill that would prevent Medicare premiums from rising sharply for some senior citizens.

The vote was 406–18.

The legislation (HR 3631) would prevent about 11 million Medicare Part B recipients from having to shoulder more than their share of an annual premium increase because of complexities in federal law and the likelihood that Social Security recipients won't get a bump in their benefits next year to cover the cost of the premium increase.

"I have a hundred thousand Social Security recipients in my congressional district, many of whom will be impacted by the increase in the Medicare Part B premiums next year since this increase is not going to be offset by the normal cost-of- living increase in their Social Security checks," said Rep. Shelley Berkley, D-Nev. "I think this is a very important way and a very necessary way of helping to keep my seniors who rely on Social Security and who will be harmed with this additional payment ... whole."

But House Majority Leader Steny H. Hoyer, one of the few lawmakers to speak out against the legislation, said most seniors, including the poorest, would be protected for the premium increase even if Congress didn't intervene.

"I don't know how many of you go to sleep at night worried about whether Ross Perot can pay his premium, but this will freeze Ross Perot's basic premium from going up. I think that as well-meaning as this legislation is, it is not about poor seniors," the Maryland Democrat said, adding that Congress had to start exercising some fiscal discipline to ensure programs like Medicare can continue to serve those most in need.

Politically, the legislation would spare Democrats from having Medicare premiums climb sharply for new enrollees and seniors with incomes above $85,000 ($170,000 for couples) as they put together an overhaul of the health care system that has some seniors deeply worried.

Indeed, Republicans repeatedly spoke out against the health care overhaul as the Medicare legislation was being debated.

"The majority wants you to think we're here today to help seniors," said Rep. Wally Herger, R-Calif. "This will help some seniors and I intend to vote for it. But seniors shouldn't sleep well tonight, for they're facing massive cuts in Medicare [under] legislation proposed by the president."

Democrats hotly dispute that charge, insisting Medicare recipients will not be hurt by the overhaul.

The Senate is expected to act on the premium bill soon.

The bill would cost $2.8 billion and would be offset by reducing the Medicare Improvement Fund, which the Health and Human Services Department uses to make improvements to Medicare Part A and Part B.

Tied to Social Security

The anomaly involving Part B premiums arises from the likelihood that Social Security recipients will not get a cost-of-living-adjustment (COLA) in their benefits next year for the first time in 35 years.

At the same time, premiums for Part B, which covers physician services and outpatient care, are expected to rise. Because most seniors have Part B premiums deducted from their monthly Social Security benefit checks, the lack of a COLA next year will mean an effective reduction in Social Security benefits for affected seniors.

Only a minority of seniors would be affected, but that still adds up to millions of people.

A "hold harmless" provision in federal law would shield 73 percent of Medicare beneficiaries from having to pay the Part B premium increase if there is no increase in their Social Security benefits.

Under current law, however, the remaining 27 percent would not only have to shoulder their own Part B premium increases, but they would be allotted a portion of the increased premiums the government can't collect from seniors who are held harmless.

Those who would be stuck with the bill are low-income seniors who receive benefits from both Medicare and Medicaid; seniors with incomes above $85,000 if they are single and $170,000 for couples; and people who are new to the program. Their monthly premium would rise to between $110 and $120 per next year, from $96.40, according to the House Ways and Means Committee.

To prevent this, the bill the House passed would extend the hold-harmless provision to all Medicare enrollees so that no Social Security recipients would see their monthly check decreased because of a Part B premium increase, according to a summary from the Ways and Means Committee.

The bill apparently does not address what might happen in 2011, when seniors are again expected to go without a Social Security COLA. More broadly, senior citizen groups have been urging Congress to make sure Social Security recipients get some boost in benefits next year, either by passing legislation to adjust the COLA or by providing a one-time payment. No benefit increase is expected otherwise, because inflation has gone down under the formula the government uses to determine payment adjustments.

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It's Hurry Up and Wait at the Finance Committee Markup

By John Reichard, CQ HealthBeat Editor

September 25, 2009 -- Senate Finance Committee Democrats were successful Friday in defeating a health overhaul amendment their chairman said would have created "an unworkable set of delays in the markup process."

The way the markup was going by the end of the day, however, Republicans could have been forgiven for thinking they had won.

The "end of the day" actually occurred at noon—despite talk earlier in the week by Chairman Max Baucus, D-Mont., that the markup would include weekend hours and wind up in time for possible Senate floor action on a health overhaul next week.

It was not a day for dealing with the nitty-gritty of overhauling health care.

Friday found Republicans adding new facets to their increasingly elaborate argument that big government is ominously on the march in America. To that end, they evoked the image of White House Health Reform Director Nancy-Ann DeParle as a czarina trying to usurp the powers of the legislative branch, and of a disgusted public rebelling against "rating bands" as the last straw confirming their suspicions that the Baucus bill is at its heart a planned government takeover of the health care system.

On the Democratic side of the dais, meanwhile, John Kerry of Massachusetts consumed a fair chunk of the morning leading the committee through a debate about his amendment compressing those rating bands—only to withdraw his amendment in the end.

And after a breathless announcement to the press Thursday evening that they would offer amendments the next morning to establish "a strong public option" in the Finance plan and insist on a roll call vote, Democrats Charles E, Schumer of New York and John D. Rockefeller IV of West Virginia did no such thing.

In other words, with hundreds of amendments awaiting action, the nuts and bolts of overhauling health care went largely untightened Friday. The one exception was an amendment, passed by voice vote, to give government regulators a peek at how much of the prescription drug discounts negotiated for purchasers are actually pocketed by the pharmacy benefits managers (PBMs) who promise big savings. The amendment was sponsored by Democratic Sen. Maria Cantwell of Washington.

But even that action may not stick. The Pharmaceutical Care Management Association (PCMA), which represents PBMs, issued a statement after the amendment was adopted saying that disclosure of the discounts would lead drug makers to shy away from giving price breaks because other purchasers would demand them too.

"Many steps remain in this debate," said PCMA President Mark Merritt. "PCMA will continue to work with policymakers in both the House and Senate and any conference committee to make them aware of the unintended consequences associated with PBM disclosure."

The amendment would limit disclosure of discounts to commissioners of insurance exchanges and any plans that the PBMs contract with. Cantwell said the information will be considered confidential and must be protected by the commissioners and the plans.

Republican Sen. John Ensign of Nevada kicked off the morning warning of the "tremendous power" possessed by DeParle, power that he said is not subject to the Senate confirmation process.

Ensign said President Obama thus far has created 18 czars of various kinds but Ensign denied that partisan considerations were involved in raising the issue. "This is not a question of going after a Democrat president," he said. "We probably should have done this before."

Baucus observed that "the job title 'czar' does not exist," saying it is essentially it's an informal term given to those who coordinate policy. He added that given delays in the confirmation process, as soon as "czars" had to be confirmed by the Senate, the president would designate someone else the next level down in the pecking order to coordinate policy.

Baucus said there are plenty of executive posts that already must be confirmed by the Finance Committee, suggesting that the panel needs not add to that burden.

Ensign differed, but his friendly way of referring to DeParle may not have conjured up a sufficiently frightening image of the czarist threat.

"We cannot call Nancy-Ann up here. . .she has broad powers," Ensign objected. "This is a question of balance of power.

"The cabinet-level people are having their power usurped. There's no question," he said. It's a question of "fighting for that balance of power that is rightfully ours."

But his amendment requiring Senate confirmation of czars failed by a party-line vote of 10–13.

Kerry offered an amendment that would allow insurers to vary premiums based on age by a factor of no more than two-to-one. The ensuing debate illuminated the trade-offs involved in shrinking those variations, which now are largely unregulated by the states. Kerry noted that millions of older Americans can't pay for coverage and that a two-to-one variation would help make premiums affordable.

But insurers say young people would be priced out of the market, with the elderly paying lower premiums, and Democratic Sen. Kent Conrad of North Dakota made the point that policy makers must find a balance between the age groups.

Kyl said the issue illustrates how deeply Democrats want to delve into the details of health care in America. Americans will rightfully conclude when they look at the details of the bill that it is a government takeover of the health care system, he said.

Senators raised other points, including the use of larger pools of people to spread out risk and make insurance more affordable for older Americans in that way. Baucus, who already has lowered the age variations in his mark from a factor of five-to-one to a factor of four-to-one, said the issue could perhaps be discussed further in the committee and Kerry withdrew his amendment.

Another meaty issue, whether to add a public plan to the Baucus mark, was also put off until later—Rockefeller said it will be brought up when the markup reconvenes Sept. 29. "I would suggest that this means that they don't have the votes for this," Republican Sen. Michael B. Enzi of Wyoming opined, concerning the failure to bring it up Friday.

Republican Sen. John Cornyn offered an amendment that would require that all amendments accepted or ruled out of order during the markup would have to be re-scored by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) for accuracy before the committee can vote to report the health overhaul measure.

The amendment also provides that if an initial score is found to be inaccurate or an amendment is found to have been incorrectly ruled out of order, the committee would have to debate and reconsider the amendment. Cornyn said the amendment was a matter of fairness since one of his amendments had been ruled out of order because it hadn't been scored by CBO.

But Baucus promised to get Cornyn a score for the language ruled out of order and said his amendment on scoring would create "an unworkable set of delays in the markup process."

Cornyn's amendment was then rejected.

But those who think the committee is moving much too fast on a health overhaul could take consolation in the fact that there was no clear end to the markup in sight as the Friday markup session concluded.

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Lawmakers Look to Address Affordability of Mandated Health Coverage

By Drew Armstrong, CQ Staff

A central issue in the health care overhaul debate has been how much the legislation will cost taxpayers. But as Senate Finance Committee members head into their Tuesday markup, Democrats on the panel are becoming increasingly vocal about how much the bill will cost people required to buy insurance.

Committee Democrats have criticized Chairman Max Baucus' draft as too stingy. Baucus, D-Mont., is offering tax subsidies to those required to buy coverage, but liberal critics say they are not enough.

"We have to make this as affordable as possible to the people in middle America, the people who have incomes of $88,000 and down," said Sen. John Kerry, D-Mass. "They can't be paying an unfair chunk of that total income to health care."

The cost of the insurance requirement has become a major issue for committee Democrats, said Sen. John D. Rockefeller IV, D-W.Va., after a meeting of those members Sept. 17.

"There was so much talk on affordability that I actually stepped in to cut it off, because we had already spent an hour on it and there were other issues we had to get at," Rockefeller said.

It is crucial, politically, that Democrats get the affordability issue right. "That's the way most people around the country will perceive the value of health care reform," said Ron Pollack, executive director of the consumer group Families USA.

Much of the affordability debate centers on the size of the tax credit the Baucus bill would give families and individuals making between 133 percent and 400 percent of the federal poverty level. At a maximum, families making up to 400 percent of the federal poverty level would be asked to pay 13 percent of their income toward premiums.

Baucus has already indicated that he may change the bill to ease some of those concerns. According to the Congressional Budget Office, the current bill would produce a $49 billion surplus by the end of a 10-year cost window. Much of that money could go to increasing the size of the subsidies people receive to help them buy coverage.

However, according to Democratic Finance Committee aides, the tax credits already make up a large portion of the bill's costs—$400 billion out of roughly $850 billion. Adding to them could create unease among Republicans, strengthening opposition to the proposal on that side.

"You're talking about the most expensive thing in the entire bill," said the committee's top Republican, Charles E. Grassley of Iowa. "If you want to make that richer, I think you're going to have concerns from about a quarter of the Democrats, and all the Republicans."

Looking to Pass the 'Smell Test'

The tax credit would set up a relationship with the government similar to that which employees buying coverage through their workplace have with their employer. For workers who get insurance, the average company pays a substantial proportion of the premium—74 percent in 2009, according to the Kaiser Family Foundation.

Under the Baucus plan, the government would do the same for people buying insurance through the bill's exchange: Consumers would be responsible for some cost, while the government would issue tax credits to pick up the rest.

The issue is whether those credits would be large enough, or whether uninsured people would be required to buy coverage they could not afford.

"If middle-class people have to pay more than they're paying today . . . I don't think that is going to pass the smell test as being affordable," said Sen. Ron Wyden, D-Ore., one of the sharpest critics of the Baucus draft's affordability.

Wyden and other lawmakers have argued that, under Baucus' bill, the subsidies provided by the government would be too small, and that the mandate would require low- and moderate-income people to spend more than they can afford.

The subsidies and mandates would not begin until 2013. Then, consumers making between 250 percent and 300 percent of the federal poverty level would be expected to contribute up to $4,100 per year toward the premium for a family insurance plan, according to Democratic Finance Committee aides.

Other estimates say the Baucus draft would force people to spend much more than that. One analysis by the Center for Budget and Policy Priorities said a family of three making 250 percent of the federal poverty level would have to pay $4,806 out of their own pocket each year.

Critics say that would be too much. But if insurance rates keep going up as they have over the past decade, people getting the tax credit to buy coverage on the exchange could end up paying less in premiums than those getting coverage through their work.

In 2009, the average consumer cost of a family insurance plan was $3,515, according to the Kaiser Family Foundation. It is notoriously difficult to predict how much premiums will rise year to year, say experts, but between 1999 and 2009 the amount consumers paid for insurance through their workplace went up by about $200 each year.

Assuming costs rise almost as quickly over the next four years, when the tax credits become available the average cost to a worker getting insurance through their company would be about $4,300 a year—about $200 more than what people getting subsidies from the government would be expected to pay.

Other proposals in the draft have raised affordability criticisms as well.

Under the proposed insurance market changes, insurers would be able to vary premiums by a factor of five, based on age—leaving older people with significantly more expensive premiums.

From a consumer's perspective, even limiting that ratio to 5-to-1 would be better than the current situation, where states set the rules and most have no limits on how much insurers can vary premiums on the individual market.

But with a mandate that would force people to buy coverage, consumer advocates argue that the age-based premium rules still allow older Americans to pay too much.

"That by itself is the biggest factor in putting health insurance out of reach for many in that age group," said John Rother, chief lobbyist for AARP. "What we're talking about here are not poor people but rather modest-income people in 300 [percent] to 500 percent of poverty range. . . . We're concerned that many people would not be able to afford it."

Alex Wayne contributed to this story.

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Liberals Challenge Baucus Proposals as Finance's Health Care Markup Continues

By Drew Armstrong, CQ Staff

September 25, 2009 --Senate Finance Chairman Max Baucus will face a number of challenges from left-leaning Democrats when his health care overhaul comes to the floor, but many of those battles are already being fought in committee as his panel marks up the proposal this week.

Liberal senators on the Finance Committee made a number of challenges Thursday to elements of the draft bill. Most of the proposed amendments by committee liberals are in areas where Baucus, a Montana Democrat, has already made compromises with Republicans and moderates—or concessions to health care industry groups—who might otherwise oppose the bill.

West Virginia Democrat John D. Rockefeller IV plans to try to amend a government-run "public plan" into the bill as a replacement for the consumer-owned co-ops Baucus drafted with fellow moderate Democrat Kent Conrad of North Dakota. John Kerry, D-Mass., on Thursday offered a separate amendment that would add a mandate on large companies to provide insurance for their workers—a stricter policy than is in the bill now.

And earlier in the day, Baucus had to join with the committee's Republicans to beat back an amendment by Bill Nelson, D-Fla., that would have undone a deal with the drug industry backed by Baucus and the White House.

With the help of Republicans and a few allies on the committee, Baucus almost certainly has the support to block those efforts. But it won't be the last he hears of them.

"My intention is to have this debate on the floor of the Senate," Kerry said at the markup.

Strategy on the Left Side

Liberals on the panel are ready to take a stand in committee first, and then on the floor, where they think they can win.

"The committee is what starts the debate and gets people thinking," said Charles E. Schumer, D-N.Y. "Lots of people who are not on the committee follow the committee, and that gets people thinking. . . . As the process moves on, for the public option and for some of these other things, it gets better and better."

Rockefeller said that on Friday he intends to offer an amendment that would set up a government-run insurance plan to compete with private insurers. That would essentially mimic policy in the House bill (HR 3200) and in a bill approved by the Senate Health, Education, Labor and Pensions (HELP) Committee (S 1679).

Schumer pointed out that the three committees that marked up the House bill all included the public option, as did the HELP Committee.

"Of all the committees, the public plan faces its steepest obstacle in the Finance Committee," said Schumer, who supports the idea. "It's the most conservative."

Kerry's amendment—a requirement that large employers offer health insurance to their workers—is another policy found in the House and HELP bills that many liberals support, but business groups such as the U.S. Chamber of Commerce strongly oppose it. And while the compromise that Baucus has come up with is not universally popular, his proposal to create a less stringent penalty for companies is favored by moderates and, he hopes, at least a few Republicans, such as Olympia J. Snowe of Maine.

Baucus' proposal would penalize employers whose workers buy health insurance on the new "exchange" marketplace and get tax credits to help them buy it. But the penalties would be limited to $400 for every employee the company has, far below what the average employer spends on employee health insurance premiums.

At the markup Thursday, Kerry argued for his amendment—"I think you've got to require employers to offer insurance," he said—but eventually withdrew it. He said he would continue the debate on the Senate floor, where Baucus may be less able to defend his proposals against more liberal Democrats favoring the mandate in the HELP bill.

Drugmaker Agreement Stays Intact

By a 10–13 vote, the panel rejected an amendment by Nelson that would have made Medicaid responsible for paying for low-income seniors' drugs. Medicare currently handles those payments.

Baucus voted with the panel's 10 Republicans to defeat the amendment, as did Democrats Robert Menendez of New Jersey and Thomas R. Carper of Delaware. The committee's 10 other Democrats voted for Nelson's proposal.

Medicaid generally gets better prices for drugs than Medicare does; Democrats said Nelson's amendment would save $86 billion over 10 years.

But his proposal would have gutted President Obama's deal with Pharmaceutical Research and Manufacturers of America, the industry's trade association. The agreement calls for the industry to contribute no more than $80 billion to the health care overhaul. As part of the deal, PhRMA members have agreed to provide 50 percent discounts to seniors who fall into the so-called "doughnut hole" gap in prescription drug coverage that forces many to pay out-of-pocket for their drugs for part of the year.

Nelson's amendment proposed using part of the money to close the doughnut hole — a move that would cost about $56 billion over 10 years, he said, leaving $30 billion for other purposes.

With a large number of amendments yet to be considered, Baucus said he planned to work late into the night Thursday and to continue the markup on Friday—and perhaps into the weekend.

"Tomorrow," he said, "we'll assess where we are."

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'Public Option' Talks Nearing Finish

By Alex Wayne and Edward Epstein, CQ Staff

September 25, 2009 --House Democratic leaders hope to produce a consensus version of their health care overhaul legislation over the weekend, two committee chairmen said Thursday.

Rules Chairwoman Louise M. Slaughter, D-N.Y., and Ways and Means Chairman Charles B. Rangel, D-N.Y., said party leaders—who have been meeting among themselves and with their caucus—were close to an agreement on the bill (HR 3200), which was marked up by three committees. However, rank-and-file Democrats remain divided on the bill's central, controversial proposal: to create a government-run insurance plan, popularly known as the public option, to compete with private insurers.

But Rangel said he expected that Democrats would be able to send a final bill to the Congressional Budget Office (CBO) for a cost estimate by Sept. 28. The estimate is required before the bill advances to the House floor.

"We have about reached the end of the negotiations," Rangel said. "I thought by tomorrow, but maybe Monday, we'll be ready for CBO."

Nadeam Elshami, a spokesman for Speaker Nancy Pelosi, D-Calif., said Democratic leaders "will continue to make progress while continuing discussions with members of the caucus" on the bill but have not set a timeline to finish the measure.

CBO needs about 10 days to produce an estimate, Rangel said, meaning the House would not vote on the bill until well into October.

Payment Rates

The public option was discussed at two Democratic Caucus meetings Thursday. Pelosi has said that the proposal will be in the bill, despite concerns among more conservative Democrats, but a dispute remains over the plan's structure.

In the Ways and Means version of the bill, approved in July, rates paid to doctors, hospitals and other health care providers under the public option would be pegged to Medicare. The Energy and Commerce Committee's version would require the public option to negotiate rates with providers, as private insurers do.

Tying the public option's rates to Medicare would yield greater cost savings, since the entitlement program typically pays less than private insurers do for the same medical procedures. But lawmakers from rural districts worry that their health care systems, already under strain from what they call underpayment by Medicare and Medicaid, might crack with the addition of another low-paying government program.

"I get that it saves money, but it saves money because it damages delivery systems in areas that are underpaid by Medicare," said Earl Pomeroy, D-N.D. A Ways and Means member, he voted against the bill in committee.

Pomeroy said the committee's staff should analyze whether a public option paying rates close to Medicare's would hurt rural health systems.

A House Democratic leadership aide said that based on discussions with CBO, it was believed that a public option paying rates similar to Medicare's would yield at least $80 billion more in savings over the next 10 years than a public option with negotiated rates.

To meet a demand from President Obama, Democrats are trying to drive the cost of their $1 trillion health bill down to about $900 billion.

Trigger Mechanism

Slaughter said House Democrats have dismissed the idea of including a "trigger" mechanism, which would allow for a government-run plan if private insurers are unable to meet targets to lower costs and expand coverage.

Sen. Olympia J. Snowe, R-Maine, is a strong proponent of such a mechanism, and Democrats in the Senate desperately want her vote for their legislation.

But in the House, "nobody's talking trigger," Slaughter said. "If we had a trigger, it should have been pulled 10 years ago."

Robert E. Andrews, D-N.J., said members also discussed how they might prevent insurance companies from unduly increasing premiums between the time a bill is enacted and when it would restructure insurance markets, in 2013. He cited the example of credit card companies, some of which have raised interest rates in advance of implementation next year of a new law imposing additional regulations.

"What happened in the credit card industry is a good indicator of what might happen," he said, adding that the caucus was discussing how to address the issue.

Once the final bill is presented to the caucus, probably next week, leaders will start counting votes to see if it can win a majority, said Andrews, who chairs the Education and Labor subcommittee on health. Education and Labor was the third panel to mark up the House bill.

Alan K. Ota contributed to this story.

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Who Will Get Whacked Hardest to Pay for Health Overhaul?

By John Reichard, CQ HealthBeat Editor

The big insurer Humana has fired the opening volley in the great battle of the health overhaul pay-fors that begins this week at the Senate Finance Committee, but the health industry may have a tough time avoiding the combination of cuts and fees that Committee Chairman Max Baucus has laid out to pay for his overhaul measure covering some 94 percent of the American people.

The blueprint to be marked up starting Tuesday by the Montana Democrat particularly bears watching. It's likely to come closer to matching any final funding plan that Congress passes than the tax-heavy approach favored by House Democrats. Both approaches would take big chunks out of Medicare payments to hospitals and insurance companies, but the House measure (HR 3200) tilts toward taxing the wealthy as a major source of funding, and lobbyists see that as a non-starter in any final agreement that gets through Congress.

Of course, there's no certainty that either the leading House or Senate measures now under consideration will draw the votes they need to make it through their respective chambers. But success by Baucus in getting his proposal through the Finance Committee would boost the now iffy odds of an overhaul and put its funding approach at center stage.

The "chairman's mark" released by Baucus overwhelmingly relies on the health industry for funding using a combination of cuts, taxes and fees, with hospitals and insurers two of the biggest targets.

With an overhaul a big new source of potential revenue, the health industry for the large part has been disciplined in recent months in refraining from attacks on Democratic funding schemes. But individual companies are affected differently by overhaul legislation, and one prominent company broke ranks in recent days.

Humana, one of the bigger players in the Medicare managed care market, has provoked the ire of Baucus along with threats of regulatory action by the Centers for Medicare and Medicaid Services because of a letter sent to enrollees in one or more of its Medicare Advantage plans.

CMS said that language in the letter asserting that overhaul legislation affecting Medicare "could hurt millions of seniors and disabled individuals" by reducing benefits and services "is misleading and confusing to beneficiaries." It "represents information to beneficiaries as official communications about the Medicare Advantage program, and is potentially contrary to federal regulations," the agency said in a Sept. 18 letter to Humana executives.

CMS instructed Humana "to end immediately all such mailings." In his own statement released Monday, Baucus called the Humana letter "wholly unacceptable."

Baucus said, "From lower prescription drug costs to free preventive care to better treatment for chronic conditions, seniors have so much to gain from health reform and I'm not going to let insurance company profits stand in the way of improving Medicare for seniors."

But stirring senior anxieties about their health care is, of course, a politically potent weapon, and coming on the eve of the Senate Finance Committee markup, it raises questions about whether other companies will join in potentially powerful attacks on the Baucus plan at a pivotal moment.

"I guess Humana waited until they could see the whites of Baucus's eyes," quipped Washington consultant Alec Vachon. "The question is, has Humana strayed off the reservation, or are they leading the rest of the industry to the promised land of no reform?"

America's Health Insurance Plans weighed in Monday with perhaps its strongest language to date blasting the Medicare Advantage cuts.

"The proposals currently under consideration by Congress include more than $100 billion in cuts to Medicare Advantage that will have a devastating impact on the more than 10 million seniors enrolled in the program," said AHIP spokesman Robert Zirkelbach. "If these cuts are enacted, seniors will experience premium increases, a reduction in benefits, and, in some parts of the country, could lose access to their Medicare Advantage plan altogether."

Sen. Bill Nelson, D-Fla., is expected to offer an amendment that would have the effect of reducing the Medicare Advantage cuts by an estimated $30 billion. But lobbyists and analysts note that under the rules, it will be difficult for senators offering amendments to reduce cuts proposed by Baucus to Medicare Advantage plans or other providers. That's because they must also propose alternative ways to produce the same savings or revenue increases.

Whether any other Democratic members will work with Nelson is the question, said a managed care industry executive. The executive, who agreed to speak candidly in exchange for anonymity, said "the industry has always known that there are going to be Medicare Advantage cuts." Modifying them in any major way will be hard, the source noted.

Complicating the picture for insurers is the differential impact of the House and Senate bills. The House bill would trim Medicare Advantage payments by considerably more—$156 billion versus $124 billion. But the competitive bidding approach in the Senate bill, even though it generates smaller cuts overall, is worse in the eyes of Medicare Advantage plans in concentrated urban markets than the House approach, the executive said. The House bill would take Medicare Advantage rates down to the same level fee-for-service providers receive in the traditional Medicare program.

Hospitals also are in line for big cuts, but they, too, may not change much, if at all.

Federation of American Hospitals President Chip Kahn pegs the size of Medicare cuts affecting hospitals at about $155 billion in both House and Senate bills. "They're about the same but they're a little differently distributed," he said in an interview. Payment updates in the House bill are reduced a little more than in the Senate measure, which relies more on reducing payments to hospitals that treat unusually large numbers of uninsured patients, Kahn said.

"Our agreement is with Sen. Baucus and the White House," he noted. The federation, the American Hospital Association and the Catholic Health Association announced an agreement with the White House and Baucus earlier this year in which Medicare payments would be cut by $155 billion to help fund a health overhaul. "The four corners of our agreement is with them," Kahn said. Other elements include an agreement that payment cuts will be calibrated to gains in insurance coverage.

Dan Mendelson, president of the consulting firm Avalere Health, doesn't see the size of hospital cuts budging much. "The extent of those cuts are modest relative to the size" of the hospital market, he said in an interview.

Other sectors in line for significant reductions are skilled nursing facilities and home health care agencies. Nursing facilities would see cuts of some $23 billion in the Baucus mark while home health would see a $43 billion cut. In the House bill, home health would see a $57 billion dollar reduction and skilled nursing facilities $32 billion. Amendments have been filed that would try to reduce those cuts.

One of the more vulnerable provisions of the Baucus pay-for package is a proposed 35 percent excise tax on high-cost insurance plans. That provision would raise $215 billion but there's bipartisan criticism of the measure. Republicans don't want tax hikes and Democrats in some cases worry that the tax will hit union members who have foregone wage hikes in return for generous health insurance coverage.

Mendelson sees "a lot of pushback" from employers who fear the excise tax will drive up the premiums they have to pay for coverage. If that offset goes away, it means other sectors will have to take a bigger hit in their Medicare and Medicaid cuts or revenue sources from outside health care will have to be found, such as shrinking tax deductions for the more affluent, he said. Or there could be a scaling back of health overhaul legislation, he added.

A health care lobbyist who declined to be named asserted that Democrats are far short of the votes they need to pass current legislation through either the Senate or House. They are a dozen votes shy in the Senate and five or six dozen short in the House, he said.

Joseph Antos, a health policy researcher with the right-leaning American Enterprise Institute, also doubts that support is there for a major overhaul.

Antos said that "despite appearances, there are not enough pay-fors for a trillion-dollar bill because there is not enough political support for the cuts. Baucus has telegraphed this by giving physicians the usual one-year fix instead of something permanent, which would be much more expensive. Also, even if we were not talking health reform this year, there is a deficit problem that must be dealt with. That means at least some of these pay-fors will be passed even if health reform is incremental."

But if Baucus is able to get his proposal through the Finance Committee with something like the financing package he has proposed, others see comprehensive health overhaul legislation as having a real chance of becoming law. "If Chairman Baucus is successful in seeing a bill through his committee, there will be a lot of momentum to bring health reform to conclusion," Kahn predicted.

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