Dems slow to cut managed care programs

WASHINGTON -- Deep cuts in Medicare's managed care programs seemed a sure bet last winter when Democrats, not exactly fans of health maintenance organizations, began to seek money to expand health coverage for poor children.

Then the NAACP and the League of United Latin American Citizens warned of the consequences for blacks and Hispanics, core constituencies for the new congressional majority.

Some Senate Democrats also expressed concern, the politics of which was summed up by Iowa's GOP Sen. Charles Grassley: "There are a lot of blue states ... that have a lot of HMOs."

Suddenly the drive to carve as much as $50 billion over five years from the Medicare Advantage program became more of a challenge than a certainty for Democrats as they advance their own agenda after more than a decade out of power.

"More and more members of Congress are having the opportunity to see how cuts would impact their beneficiaries," said Karen Ignagni, president of American Health Insurance Providers.

"This means significant sacrifice on the part of their seniors and they're very concerned about it," said Ignagni, whose group is lobbying to prevent the multibillion-dollar cuts.

Congressional critics of the insurers that run HMOs and preferred provider organizations (PPOs) under Medicare see it differently. They point to an estimate that the government pays $112 per recipient in managed care for every $100 it pays for traditional coverage.

"There seems to be no question that they're overpaid," said Rep. Fortney Stark, D-Calif., chairman of a House subcommittee on Medicare and a proponent of cuts in the managed care program.

Added Rep. Earl Pomeroy, D-N.D.: "Right now the Democrats' line is this is an insurance company slush fund."

A final decision on cuts to Medicare managed care is months away. Yet Democratic lawmakers and aides say the early move to trim up to $50 billion is all but dead. Smaller savings remain likely, they say, particularly in the fast-growing privately run fee for service plans.

The director of the National Association for the Advancement of Colored People's Washington bureau had written lawmakers on March 14 that fewer dollars for Medicare Advantage "would have a negative impact on the health and health care of millions of Medicare beneficiaries, particularly for low-income and minority beneficiaries."

Writing on behalf of the nation's oldest civil rights organization, Hilary O. Shelton said, "Access to coordinated care and disease management services are especially critical to minorities who are more likely to suffer from common chronic health conditions, such as diabetes, asthma, respiratory disease, and certain forms of cancer."

Rosa Rosales, national president of the League of Latin American Citizens, wrote that her group was concerned further cuts to Medicare Advantage "will threaten access to comprehensive benefits, result in higher out-of-pocket health care costs, and create financial barriers to care that will be particularly harmful for Hispanic seniors."

The pressure drew no commitment from New York Rep. Charles Rangel, the Democratic congressman from Harlem who chairs the powerful House Ways and Means Committee. "Well, I heard them. We have to do the best we can with the limited resources we have," he said.

Stark countered with a memo circulated privately to all House Democrats.

The memo said the insurance industry is "more worried about profits than patients" and there are "less costly and more efficient ways" than managed care to provide all people in Medicare with enhanced benefits.

It said minorities do not enroll in managed care plans in disproportionate numbers and low-income elderly are more apt to be in Medicaid. It also said attempts to shield managed care payments from cuts would make it difficult to expand children's health coverage and increase benefits in the new Medicare prescription drug program.

Medicare managed care became an obvious target for Democrats through an unusual combination of events.

Democrats new to power after the November elections quickly decided to make a signature issue out of expanding health care for poor children.

At the same time, House Speaker Nancy Pelosi, D-Calif., and others hope to position Democrats as the party of pay-as-you-go. That means $50 billion in increased spending in one area of the budget would have to be offset by $50 billion in cuts somewhere else.

Additionally, Republicans long have advocated managed care, reflecting their preference for private enterprise over government-run social programs created and nurtured by Democrats.

Figures compiled by the Center for Responsive Politics show the industry gave 60 percent of its donations to Republicans for the two-year campaign cycle that ended last fall -- $4.5 million, compared with $2.9 million to Democrats -- and has spent more than $32 million lobbying in each of the past two years.

Supporters of HMOs and other managed care plans contend they offer better coverage than traditional Medicare, including eyeglass benefits in some cases, and more coordinated care in many.

According to the government's most recent statistics, more than 8 million beneficiaries are enrolled in managed care, or about 18 percent of the total Medicare population. Growth is rapid; congressional experts predict it will reach 22 percent by next year.

But many Democrats say Republicans, who controlled Congress for most of the past 12 years, deliberately overpaid insurance companies.

On average, the government spends $112 per year to cover Medicare patients in managed care for every $100 it spends on those in the traditional program, according to an estimate by the Medicare Payment Advisory Commission.

In some areas of the country, though, the gap is far higher -- 150 percent or more -- and several officials say it is highest in Puerto Rico.

One expert recently told Congress that all Medicare beneficiaries pay an estimated $2 a month in higher premiums to finance the additional payments.

"What is occurring now is that the most inefficient plans are expanding their enrollment, and providing extra benefits with taxpayer dollars in an inefficient manner," said Mark E. Miller, the commission's executive director.

The Congressional Budget Office recently estimated that holding payments in managed care Medicare to the level of the traditional program would save $54 billion over five years and $149 billion over 10 years. That money would allow Democrats to pay for different programs, including children's health care.

Support for Medicare Advantage is more bipartisan in the Senate that in the House, and that makes deep cuts harder to achieve. At a recent Senate Finance Committee hearing, three Democrats expressed concerns about the issue.

Grassley, the panel's senior Republican, said in an earlier interview, "We have fought very hard to get equality in rural areas and this (deep cuts) could destroy it."

Home state factors count.

In parts of Oregon and Washington, 30 percent or more of all Medicare beneficiaries choose managed care over traditional Medicare, particularly high concentrations.

"There certainly have been wasteful practices" overall, Sen. Ron Wyden, D-Ore., said in an interview. But whatever Congress decides, he said, no harm should come to "the good guys who provide better care than traditional Medicare."

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On the Net:

Medicare Advantage: http://www.medicare.gov/Choices/Advantage.asp

Medicare Payment Advisory Commission: http://www.medpac.gov