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Senate Democrats Assail Bush's Proposed Health Program Budgets

By Drew Armstrong, CQ Staff

February 6, 2008 -- Senate Finance Democrats assailed the health proposals in President Bush's fiscal 2009 budget request Wednesday, directing their ire at the treatment of private Medicare plans and children's health funding.

Appearing before the committee, Health and Human Services Secretary Michael O. Leavitt drew battle lines with Democrats over the future of Medicare. He defended the administration's preference for using private insurers and injecting market forces into the big entitlement program, which he described as inefficient and lacking the tools needed for modernizing itself and containing health spending.

Panel Democrats were highly critical of the Bush's budget, which would reduce Medicare's spending growth by $12.4 billion in fiscal 2009 and by $178.2 billion over five years, largely through cuts in payments to health care providers.

"You've asked for huge, draconian cuts that this Congress is not going to enact," said Finance Chairman Max Baucus, D-Mont. "How can we have an honest-to-goodness discussion when your budget seems based on ideology?"

The battle appears to be the administration's last stand in its two-term effort to "privatize" much of Medicare through Medicare Advantage, the private health insurance alternative that is funded by the government. Critics of Medicare Advantage point to the higher payments that such plans receive compared with per-patient costs of traditional, government-run Medicare.

The Senate Finance Committee has scheduled a series of hearings on the Medicare Advantage program as it considers greater regulation of the plans and perhaps equalizing the payments that private insurers receive with the per-patient costs of traditional Medicare.

Charles E. Grassley of Iowa, the panel's ranking Republican, questioned the administration's revised proposal to expand funding the State Children's Health Insurance Program (SCHIP).

For fiscal 2008, Bush proposed a $5 billion expansion over five years; for fiscal 2008, the budget contains a $19.3 billion SCHIP expansion over five years.

"The fact that the president said we only needed $5 billion carried a great deal of credibility with about three-fourths of the people on the Republican side of the aisle," Grassley said. "We didn't get the bipartisan compromise that the president could sign, and we would have been able to do that if this had been acknowledged a year ago."

Last year, Congress twice cleared bills (HR 976, HR 3963) that would have expanded federal funding for SCHIP by $35 billion over five years, to $60 billion. Bush vetoed both measures, and the House failed to override either veto. In December, Bush signed into law a measure (PL 110-173) that keeps SCHIP running through the end of March 2009 with enough money to maintain coverage at current enrollment levels.

When Grassley asked Leavitt to explain the fiscal 2009 figure, the secretary said the administration had recalculated the demand for SCHIP, and added funds for outreach and enrollment efforts to bring in more children.

"We have better estimates now," Leavitt said.

Democrats have declared Bush's proposed budget, which he released Feb. 4, "dead on arrival." The administration has taken pains to not characterize any decrease spending as cuts, but as reductions in Medicare's 7.2 percent annual growth rate. According to Leavitt, the administration's proposals would slow that growth rate to 5 percent in fiscal 2009.

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