Democrats Move to Revive Medicare Law

Sen. Hillary Rodham Clinton (D-N.Y.) and Rep. John D. Dingell (D-Mich.) will introduce legislation to restore Senate-passed language that would cut payments to private insurers in Medicare by $26 billion over the next decade, the lawmakers said yesterday.

As part of a broad budget-cutting bill, the Senate approved legislation that targeted private HMOs participating in Medicare by changing the formula that governs their reimbursement, lowering payments $26 billion over the next decade. But after lobbying by the health insurance industry, House and Senate Republican negotiators last month made a critical change that had the effect of eliminating all but $4 billion of the projected savings, according to the Congressional Budget Office.

Language inserted into the budget compromise stipulated that a key part of the formula change could be applied only in 2008, 2009 and 2010. The result, CBO analysts say, was a $22 billion swing in the insurance industry's favor.

Clinton described the behind-the-scenes action, detailed yesterday in a Washington Post report, as "the latest example of Republicans taking care of their special interests at the expense of the American people."

The Senate approved the compromise budget plan last month, but one vote remains in the House early next month. If the plan is signed into law, Clinton and Dingell said they will introduce legislation to restore the original Senate language.

They would also try to revive a Senate-approved cut to a fund established to lure managed-care companies into Medicare. If both Clinton-Dingell proposals are approved, it would save the government more than $32 billion over a decade, according to CBO estimates.

Republicans have been adamant that the changes made in conference will not have the impact that CBO analysts project. In a statement this week, Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) said CBO is assuming that Medicare administrators would let private health plans "game the system so badly that they not only would reverse the payment cut, but they'd also gain even more money from Medicare. This is a ridiculous assumption."

Grassley said yesterday he would be "happy to work with my colleagues on legislation to cut other overpayments made by Medicare and Medicaid."