Spending Cut Package Provision That Would Give $22B to Insurers Could Hamper Bill’s Passage

Sen. Hillary Rodham Clinton (D-N.Y.) and Rep. John Dingell (D-Mich.) on Tuesday said they plan to introduce legislation to restore a provision in the fiscal year 2006 spending reduction package (S 1932) that would cut billions of dollars to private insurers participating in the Medicare program, the Washington Post reports (Weisman, Washington Post, 1/25). The Post on Tuesday reported that House and Senate Republican conferees in December 2005 eliminated language in the Senate version of the budget bill that would have reduced Medicare reimbursements to HMOs by $26 billion over the next 10 years, according to Congressional Budget Office estimates. Under the revised provision, reimbursements to HMOs would be reduced by $4 billion. House and Senate Democrats were excluded from the discussions (Kaiser Daily Health Policy Report, 1/24). Rodham Clinton called the move by congressional Republicans "the latest example of Republicans taking care of their special interests at the expense of the American people." Rodham Clinton and Dingell also said they will try to re-establish a Senate-approved reduction to a program designed to attract private insurers to Medicare. If both of their proposals are adopted, it would save $32 billion over 10 years, according to CBO estimates (Washington Post, 1/25). Democrats and other groups opposed to the spending cut package are hoping that news about the revision "will be the ticket to killing the bill" when the House takes a second vote on it, likely in February, CQ HealthBeat reports. However, supporters of the budget bill said Republican leaders would successfully move it through the House and denied charges from bill opponents. Senate Finance Committee Chair Chuck Grassley (R-Iowa) said the budget conference report would still cut Medicare payments to insurers by $6.5 billion over the next five years. Grassley said, "Even more important, it rescinds the policy leading to those extra Medicare payments. The change is supposed to make sure that a part of the payment formula to plans, called risk adjustment, is fully implemented" (Carey, CQ HealthBeat, 1/24).

Editorial
The "twea[k]" of the spending cut bill "in order to provide the health insurance industry with a $22 billion windfall" was "[o]ne of the rawest displays of lobbyists' power in the Capitol," a New York Times editorial states. The change, which was "dearly sought by the HMO industry," occurred during conference committee meetings where lawmakers and staff members in "closed-door, Republican-only bargaining sessions," reduced the savings from a formula intended to produce $26 billion in savings, according to the editorial. The negotiators instead reduced the savings amount to $4 billion and "handed the HMOs a $22 billion gift by protecting the inflated reimbursements they currently reap through Medicare," the editorial adds (New York Times, 1/25).