By Mary Agnes Carey, CQ HealthBeat Associate Editor
March 6, 2007 – As Democrats consider reducing Medicare payments to private health plans as a way to finance other spending priorities, the ranking Republican on the Ways and Means Committee warned Tuesday that those cuts could hurt poor and minority beneficiaries.
In a letter sent Tuesday to his House colleagues, Rep. Jim McCrery of Louisiana said Congress has "made that mistake before" with reductions to Medicare Advantage plans in the 1997 balanced-budget act that led to many of the plans dropping out of Medicare and more than 2 million Medicare beneficiaries losing access to both the plans and additional benefits they provided.
"For decades, Democratic demagogues have accused Republicans of trying to 'balance the budget on the backs of the poor.' Now Democrats are actually trying to do it," McCrery wrote.
Insurers face concerted efforts by congressional Democrats this year to cut Medicare Advantage payment rates and have mounted a campaign to oppose any reductions, saying their plans provide more benefits and save beneficiaries money. But Rep. Pete Stark of California, the chairman of the House Ways and Means Health Subcommittee, said the plans are overpaid, citing data from the Medicare Payment Advisory Commission that says Medicare payment rates to Advantage plans average 112 percent of fee-for-service payment rates.
Separately Tuesday, Senate Finance Committee Chairman Max Baucus, D-Mont., said Medicare Advantage cuts were one possibility to help finance an expansion of the State Children's Health Insurance Program (SCHIP), which is up for reauthorization this year.
According to McCrery's letter, 40 percent of Medicare-eligible African Americans and 53 percent of Hispanics are enrolled in Medicare Advantage plans. In 2004, the most recent figures available, Medicare Advantage was the leading supplemental coverage choice for beneficiaries with income between $10,000 and $20,000, and nearly half of all Medicare Advantage enrollees and 64 percent of minority enrollees have income below $20,000, McCrery said.
"If we eliminate this program we will be falling into the Democrats' trap, and moving one step closer to a socialist-style government-run health care system," he wrote.