Senate defeats costly Medicare ‘fix’

The Senate on Wednesday blocked an expensive change to the way doctors are paid under Medicare over concern about the mounting deficit, in what Republicans called the first defeat for President Obama’s health care plan.

Democratic leaders had sought the 10-year, nearly $250 billion bill as a fix to the long-term Medicare problem, but without proposing a way to pay for it, they lost support from moderate Democrats, signaling that cost could become a significant hurdle to a reform bill.

In the House, Democratic leaders said they would have a bill by Thanksgiving. But they’re still trying to figure out exactly how far they can push a government-run health plan that would compete with private insurers.

House Speaker Nancy Pelosi told members at a caucus meeting Tuesday night that she was just eight votes short of the threshold for the so-called “robust public option,” which ties reimbursement rates to those of Medicare plus 5 percent, according to a lawmaker who was present.

Tying the public option to Medicare reimbursement rates has become a major sticking point in the House debate. The Senate proposal blocked Wednesday would have restructured that system, which requires Congress to block drastic cuts each year, and established a new formula.

It “would help ensure that seniors and military families get the care they need by fairly compensating Medicare and [military] doctors,” said Senate Majority Leader Harry Reid of Nevada. “It is unfortunate that Republicans have again chosen to put politics before the needs of the American people.”

There was near-universal agreement on Capitol Hill to repeal the formula, called the Sustainable Growth Rate, but Republicans and moderate Democrats expressed skepticism to adding nearly $250 billion to the deficit.

“With a record deficit and a ballooning national debt, the American people are saying, ‘Enough is enough,’ ” said Senate Minority Leader Mitch McConnell of Kentucky.

Sen. Evan Bayh, a moderate Democrat from Indiana, told reporters last week that he supported the fix but wanted to find a way to pay for it. He voted against the bill Wednesday, as did 12 other Democrats and all Republicans. The procedural vote required 60 votes for passage.

The bill was supported by the American Medical Association and the AARP and likely would have gone a long way toward gaining physicians’ support for health care reform.

Mr. Reid said that instead of the long-term fix, the Senate would likely pass a one-year repair to prevent a 21 percent cut required in January.

In the House, the debate is focused on structuring a public option that can generate the 218 votes required for passage.

In addition to the so-called robust public option, the chamber is considering a version under which Health and Human Services Secretary Kathleen Sebelius would negotiate doctor reimbursement rates with providers, a plan favored by members from rural states who fear that the public option would leave their doctors at a disadvantage.

A third plan would trigger a public option if negotiated rates did not lower costs over a set period.

Democrats who favor the robust option point to a superior initial cost estimate from the Congressional Budget Office, which predicted it would cost $870 billion - $30 billion under President Obama’s $900 billion ceiling.

Story Continues →