Medicare Compliance & Reimbursement

The final draft placed on president's desk could be quite different from either bill.

Now that the House and Senate have both passed Medicare reform bills, a lucky group of House and Senate conferees gets to try and hammer out the stark differences between the bills.

At a July 1 forum organized by the non-partisan Alliance for Health Reform, Patrick Morrisey, House Energy and Commerce Committee GOP deputy staff director, not surprisingly said the Senate should move towards the House bill in the Medicare conference committee currently forming. Elizabeth Fowler, chief health and entitlements counsel for the Senate Finance Committee Democrats, predictably said the opposite, as did William Hoagland, Senate Majority Leader Bill Frist's (R-TN) director of budget and appropriations.

But there was one thing all three staffers agreed on regarding conference deliberations: The answer to that perennial Capitol Hill question - "Will it be done before the August recess?"- is almost surely no.

With all the House conferees not even officially named as of July 11, nothing has occurred to challenge these staffers' prediction of lengthy conference deliberations. Many thorny issues remain to be resolved. For instance, the House bill envisions direct competition between fee-for-service Medicare and private plans starting in 2010, and also contains vastly expanded tax-advantaged accounts that would allow people of all ages to save for health needs and for retirement. Conservative GOP representatives view provisions like these as all too rare redoubts of reform to be zealously guarded, while Senate Democrats and moderate Democrats see them as threats to the very existence of Medicare and employer-based health coverage.

Morrisey suggested Senate negotiators had more freedom to move than their House counterparts: "When you have a one-vote margin [216-215] coming out of the House compared to a 76-21 vote in the Senate, I think that it's important that the Senate move much closer to the House position." But Fowler and Hoagland argued that the House's one-vote margin could actually be more robust than the Senate's 55-vote difference. By coming in the Senate's direction, Fowler argued, House leaders could gain more than enough Democratic votes to overcome conservative Republican losses: "There is room, I think, for a wider bipartisan margin in the House if they move in our direction."

She added that "Republicans and the President are more protected if there is a lot of bipartisan support." And Hoagland reminded listeners that Frist had rejected putting the $400 billion budget reserve for Medicare reform under so-called reconciliation procedures, which would have allowed a Medicare bill to pass with 51 votes.

"The leader made a very explicit decision on his own part: 'No, I'm going to do this on a bipartisan basis,'" Hoagland said. So "we don't have as much flexibility as Patrick would suggest" because "a conference agreement on this, outside of reconciliation, is fully filibusterable," and thus could require 60 votes to pass.

Illustrating Fowler's and Hoagland's points about the limits of Senate flexibility, 37 Democratic senators sent a strongly worded July 8 letter to President Bush laying down conditions for their support of a Medicare conference agreement. Notably, the letter was coordinated by Senate Minority Leader Tom Daschle (D-SD) and Sen. Edward Kennedy (D-MA); the support of Kennedy, a liberal icon, was perhaps the crucial factor in the Senate Medicare bill's substantial victory.

The letter's signatories say they will not support a conference agreement containing head-to-head competition between FFS Medicare and private plans, calling it "a vast social experiment that would raise premiums for Medicare and victimize the oldest and sickest senior citizens." The letter also rejects the new tax-advantaged accounts in the House bill, and also says that any conference agreement must contain sufficient help for low-income seniors, provisions to preserve existing retiree coverage, and non-risk bearing government-run back-ups in areas where risk-bearing private plans are unwilling to provide drug coverage to FFS Medicare beneficiaries.

On the merits, the administration's sympathies, as evidenced by past statements, are more in tune with the House bill. However, the White House has so far avoided publicly taking sides in the conference debates, and some knowledgeable observers are predicting - asMedicare Payment Advisory Commission vice-chair Robert Reischauer did in a July 8 telephone briefing sponsored by the Center on Budget and Policy Priorities - that the final result out of conference will be close to the Senate bill.

One reason Reischauer may be right: With both the economy and the Iraqi post-war environment both still unstable, President Bush may want a drug benefit for seniors and a bill-signing ceremony more than he wants fundamental changes in Medicare. As Centers for Medicare & Medicaid Services Administrator Tom Scully said July 10, while refusing to take a position on FFS-private plan competition: "The president wants to get a bill. The Secretary wants to get a bill. And I want to get a bill."