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Baucus Concedes to Political Realities for Pared-Down Medicare Package

By Drew Armstrong, CQ Staff Writer

December 13, 2007 -- A proposed Senate Medicare package will be slimmed down from earlier versions and will not deeply cut the private insurers who had been targeted to pay for the bill, according to leaders of the Finance Committee.

Chairman Max Baucus, D-Mont., backed away Thursday from earlier plans to cut Medicare Advantage, a private-sector version of Medicare run by health insurers paid by the government. The Bush administration has threatened to veto any legislation that severely cuts the private plans, and Republicans have vowed to use their numbers in the Senate to block such cuts.

The legislation is being written to stop a 10 percent cut to doctors' Medicare payment rates that is scheduled for Jan. 1. The package will also likely contain a funding extension of the State Children's Health Insurance Program that will last through 2008.

That the Senate is crafting the bill instead of the House already represents a concession for Democrats. House Speaker Nancy Pelosi, D-Calif., announced Thursday that the House would wait for legislation from the Senate instead of writing its own bill. "We will not be originating a Medicare bill in the House," she said.

That means the House has essentially given up on a raft of changes to Medicare that had been a priority for Democrats. It is a deferral to political realities in the Senate, where Republicans have used the threat of a filibuster to force a narrower Medicare package acceptable to the White House, conservative Republicans and private health firms.

Baucus previously had said that any bill would end up cutting the private plans. But asked Thursday, he indicated otherwise. "No… the president will veto MA cuts, or general MA cuts," Baucus said, referring to Medicare Advantage.

Baucus said the bill would be written to avoid a political showdown. "It's designed to pass... and be signed by the president," he said.

Iowa Republican Charles E. Grassley, the committee's ranking minority member, said the bill would contain no new policy initiatives. "There'll be other fixes," he said, but only to current policies.

A bare-bones package will likely give doctors only a small payment increase, if any. It will likely be paid for, in part, with money out of a "stabilization fund" slated to pay private plans offering new services to patients living in areas with relatively few Medicare services. Medicare Advantage payments to hospitals with teaching programs, which receive increased Medicare reimbursement in return for educating new doctors, would also be cut.

"It's my understanding that the double-dipping in medical education is the only thing the president will approve [directly] out of Medicare Advantage," said Grassley.

He predicted that the coming bill would make it to the president's desk, despite House Democrats' grumbling about having to give up many of their priorities. "I kind of read this that when we've got a midnight hour and nobody wants to go home and [let] doctors take a 10 percent cut... that [the House] might just go along with it," Grassley said. F

Richard Rubin contributed to this report.

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