- The Washington Times - Monday, October 12, 2009

Home-state health industries are poised to play significant roles in lawmakers’ votes on the health care bills as they make it to floors of the House and Senate.

Minnesotans and Indianans aren’t likely to vote for a bill with a tax on medical devices. New taxes on pharmaceutical companies haven’t gone over well in states with major drug manufacturers. And don’t expect any support from lawmakers from rural states for a public option based on Medicare rates.

A proposal from Senate Finance Committee Chairman Max Baucus, Montana Democrat, to impose a $4 billion annual tax on medical device makers has been met with staunch opposition from lawmakers with large medical companies in their home states.

Sens. Amy Klobuchar and Al Franken, Minnesota Democrats, and Sens. Evan Bayh, a Democrat, and Richard G. Lugar, a Republican, of Indiana, sent a letter to Mr. Baucus opposing the tax. The four senators were joined by a few others in a follow-up letter last week.

“We are extremely concerned that this tax could threaten jobs in our states, reduce domestic investment in research and development, and ultimately diminish access to life-saving medical devices for patients,” they said.

Mr. Baucus has cited the tax, which would be imposed on products such as artificial limbs and X-ray machines, as a key way to pay for his reform plan.

The most significant home-state sway could be over the public option. Proposals to establish a government insurance plan tied to Medicare rates, strongly favored by liberal Democrats, have been knocked down by lawmakers from rural states, where doctors sometimes aren’t fully reimbursed for treating Medicare patients.

They worry that health care providers in rural areas would be further hurt if a government insurance plan was based on the Medicare rates, which compensate doctors differently for providing the same procedures across the country, generally paying doctors more in heavily populated areas and less in areas where the cost of living is lower.

Several lawmakers from those regions, particularly Blue Dog Democrats in the House, say they will vote against any such plan. Alternative proposals would establish a public option based on negotiated rates or “Medicare plus 5 percent.” In the Senate Finance Committee, the public option was scrapped.

“The biggest problem I’ve had with the public option proposals is that they’ve been tied to Medicare levels of reimbursement, which would be a very serious problem for my state because we have the second-lowest level of reimbursement in the country,” said Sen. Kent Conrad, North Dakota Democrat. “If all reimbursement gets tied to Medicare levels, my state is in deep trouble.”

Other home-state issues included a proposal in the Senate Finance Committee to require pharmaceutical companies to reimburse the government through Medicare rebates exceeding $100 billion over 10 years. It failed in part because of votes from two key Democrats - Sens. Robert Menendez of New Jersey and Thomas R. Carper of Delaware. Both of them represent states with many large pharmaceutical companies.

The proposal, from Sen. Bill Nelson, Florida Democrat, is likely to come up again if the bill makes it to the Senate floor.

Home-state interests from top leadership altered the reform bill as well. Senate Majority Leader Harry Reid, a Nevada Democrat who faces a tough re-election battle next year, said he worried about his home state when he heard about Mr. Baucus’ proposal. He sent a message through the social-networking site Twitter, which limits messages to 140 characters, saying that the reform bill “has 2 be good for NV before taking 2 the floor.”

He later touted the deal he cut with Mr. Baucus to improve the Medicaid reimbursement rates in his state. Nevada would receive a full 100 percent match for any additional Medicaid patients for five years, whereas other states would be responsible for 77 percent to 95 percent of the costs, depending on the wealth of the state.

“I promised the people of Nevada that I wouldn’t support any health insurance reform proposal that wasn’t good for our state and I meant it,” Mr. Reid said in a statement. “This latest proposal is a major improvement to the chairman’s original proposal.”

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