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Attack on HHS Budget Proposal Enters Day Three

By Mary Agnes Carey, CQ HealthBeat Associate Editor

February 9, 2007 -- House Ways and Means Democrats on Thursday continued their party's assault on provisions of President Bush's fiscal 2008 budget proposal that Democrats say would weaken the nation's already fragile health care safety net and increase the number of uninsured Americans.

Department of Health and Human Services Secretary Michael O. Leavitt did his best to defend the provisions under fire—saying that they would strengthen federal entitlement programs and help more Americans purchase health insurance—but Democrats grilling Leavitt on his third consecutive day of Capitol Hill testimony disagreed.

"It's clear from the president's budget our beliefs are very different," said Rep. Pete Stark, D-Calif. "It's all cuts. Just cuts," Stark said of the budget's plan to trim billions over the next five years in payments to hospitals, home health care agencies, and other health care providers who offer services under Medicare's traditional fee-for-service program.

Stark said the budget would not reduce payments to Medicare Advantage plans—coverage that offers both drug and other health care benefits—but Leavitt said after the hearing that the reductions to Medicare fee-for-service providers would also mean that payments to "MA" plans would be reduced by $12.5 billion over the next five years.

During the hearing, when Leavitt stated that MA plans were about integrating care for Medicare beneficiaries, Stark said Leavitt had no figures to support that statement. "Sounds like the for-profit plans have made huge political contributions and those are getting to you," said Stark, who has expressed an interest in reducing Medicare payments to MA plans.

Several Democrats on the panel criticized a provision in the president's budget that would offer a $7,500 tax deduction for individual health insurance policies and $15,000 for family coverage. Leavitt said allowing all Americans—not just those with employer-sponsored health insurance—to receive a tax benefit would help more Americans without coverage purchase it. He added that another element of Bush's plan—grants to states to help develop and finance coverage for the uninsured—would work with the tax changes to help lower-income Americans afford coverage

Democrats disagreed, saying the change could cause major damage to employer-sponsored health care and would give a greater tax benefit to those in higher-income tax brackets. "It is not defensible to the people of this country," said Rep. Sander M. Levin, D-Mich. While the administration's proposals may be well intentioned, "how you do it seems to hurt more people and help very few," said Allyson Y. Schwartz, D-Pa.

The three-minute rounds continued, with members on both sides questioning Leavitt about other areas of the budget. Several panel members said the proposal to stop Medicaid graduate medical education payments would hurt teaching hospitals, but Leavitt urged a more comprehensive overhaul of the system, stressing that "everyone needs to be bearing some of these costs."

When Democrats and Republicans alike complained that proposed cuts in Medicare hospital payments would hurt those facilities, Leavitt said hospital margins, access to capital, and quality of care were all "strong."

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