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House Democrats Outline Health Recommendations for Deficit Panel

By Emily Ethridge, CQ Staff Writer

October 13, 2011 -- House Democrats who specialize in health care policy called on the joint deficit reduction committee to preserve Medicare and Medicaid and fix Medicare's flawed physician reimbursement formula, while offering up familiar health care savings proposals.

House Judiciary Committee Chairman Lamar Smith, R-Texas, had just one recommendation for the committee, also related to health care: adopt a longtime GOP proposal to overhaul the medical malpractice system.

The recommendations, contained in a flurry of letters, came on the eve of a deadline for standing committees to submit recommendations to the deficit panel, which is charged with laying out a plan to trim at least $1.2 trillion from the deficit over the next 10 years.

The Democrats' health care recommendations came from Sander M. Levin of Michigan, ranking member of the Ways and Means Committee; and Elijah E. Cummings of Maryland, ranking member of the Oversight and Government Reform Committee; and Henry A. Waxman of California, the top Democrat on the Energy and Commerce Committee.

All three Democrats called on the deficit committee to maintain the basic promise of Medicare and Medicaid, to maintain the current Medicare eligibility age and not to shift costs onto states or beneficiaries. The lawmaker argued that such cost shifting would transfer a financial burden to those who can least afford it, and do nothing to reduce actual health care costs.

"Increasing the Medicare eligibility age may reduce Medicare spending, but outlays in other federal programs would increase, reducing the net savings to the federal government," wrote Levin.

The Democrats also said money could be saved by the continued implementation of President Obama's health care overhaul (PL 111-148, PL 111-152), and by reducing waste, fraud, and abuse in the government health programs.

Smith stressed the savings that he said would come from a medical malpractice overhaul, pointing to a Congressional Budget Office estimate that the measure would reduce the deficit by $40 billion and $57 billion over 10 years. The bill (HR 5) would cap non-economic awards at $250,000, restrict who is liable for damages and limit the amount of time in which a lawsuit could be filed.

Republicans have pushed the measure for years, but opposition from Democrats and some GOP lawmakers has prevented it from becoming law. Nearly 100 medical provider groups recently wrote to the debt reduction panel asking it to include significant medical malpractice changes, including the cap on non-economic damages—but that was countered by a letter from 21 consumer and patient advocacy group opposing the changes.

Democrats Push 'Doc Fix'

The Democrats said that any health savings should be used to fix immediate Medicare problems, primarily replacing the formula for reimbursing physicians who see Medicare patients. Although there is near-universal agreement that the formula needs to replaced, the estimated cost of repealing it is $300 billion over 10 years.

But the Democrats did not offer a detailed solution to the formula.

The Democratic lawmakers' letters also featured several familiar proposals for savings on prescription drugs.

"On the top of your list for health care savings should be righting the wrong done to taxpayers in the creation of the Medicare prescription drug program," said Waxman.

He, as well as Cummings, asked the committee to require pharmaceutical companies to provide rebates for Part D program drugs to those eligible for both Medicare and Medicaid, as well as seniors in a low-income subsidy program. Waxman has introduced legislation (HR 2190) to expand those rebates.

Waxman and Cummings also asked the committee to ban "pay for delay" agreements between brand-name and generic drug manufacturers that keep more-affordable medications from coming to market quickly. Obama has also proposed stopping such deals, and the Senate Judiciary Committee advanced a measure (S 27) to do the same, with the support of Iowa Republican Sen. Charles E. Grassley.

Cummings's letter said the deficit committee should lift a restriction in the 2003 prescription drug law (PL 108-173) that bars the secretary of Health and Human Services from negotiating lower prescription drug prices in Medicare. Pharmaceutical manufacturers oppose the idea, saying such a move could limit seniors' access to drugs.

Cummings also recommended allowing the Office of Personnel Management to contract with pharmacy benefit managers to get lower drug prices for the federal employees' health system. That provision could save $1.6 billion over 10 years, his letter said.

Waxman also urged the committee to reject new restrictions on states' financing sources for Medicaid, reductions in matching payment rates for state coverage efforts, or proposing a uniform federal matching rate created by averaging the rates the federal government pays states to cover different types of enrollees.

Waxman also called for maintaining the health care law's Prevention and Public Health Fund. Obama's deficit reduction plan would trim $3.5 billion from the $15 billion allocated to the law over 10 years.

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