Medicare Bill Hurdle: Insurance Subsidies

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Medicare Bill Hurdle: Insurance Subsidies

By Juliet Eilperin

Washington Post, July 8, 2003

The idea of federal subsidies for private health insurance emerged yesterday as a key obstacle in lawmakers' quest to resolve House and Senate differences and add prescription drug coverage to Medicare.

The House's version of the legislation calls for federal benefits to Medicare recipients who buy private health insurance policies that include drug coverage. The Senate version would provide drug benefits without such subsidies. Negotiators must resolve the two bills before President Bush can sign the prescription drug proposal into law.

In a letter yesterday, Sen. Edward M. Kennedy (D-Mass.) and 36 other Democratic senators said they would reject any compromise that includes what is known as premium support. The proposal, they said, would help the wealthiest and healthiest elderly Americans join private health plans, leaving traditional Medicare to care for the sickest and costliest patients.

"The bill cannot give seniors false choices that coerce them into leaving conventional Medicare to enroll in HMOs and private plans," the Democrats wrote. "It is wrong to provide greater resources to enrich private plans while starving Medicare in the bargain. It is wrong to legislate a vast social experiment that would raise premiums for Medicare and victimize the oldest and sickest senior citizens."

But House conservatives are just as adamant about keeping the proposed subsidies for private plans, saying Medicare cannot sustain the anticipated flood of retiring baby boomers without them.

"That's the test of whether we have reform or not," said Rep. Paul Ryan (R-Wis.). Without the provision, he said, "we're just exploding an entitlement program. That's antithetical to our values."

Ryan and more than 40 other conservatives wrote to Speaker J. Dennis Hastert (R-Ill.) shortly before the House voted on the bill last month and warned they could not accept a final measure without the premium-support language. To win the votes needed for passage, Hastert promised to fight in the House-Senate conference to make sure the provision stays.

Proponents of the House measure, which would take full effect in 2010, say it would hold down costs by promoting a competitive health care market in which seniors could choose among several plans. But opponents say it would entice the healthiest seniors to leave Medicare, since they would qualify for lower premiums from companies that would reject less healthy applicants.

The question of premiums is not the only sticking point in the upcoming negotiations. The two chambers differ over how to establish backup coverage in areas where private insurers don't offer plans, and on whether Americans should be able to establish private medical savings accounts that would provide tax breaks for putting money aside for future health costs, among other matters.

"This is an extremely complicated and important issue, and it will take a lot of work to resolve the differences," said Rep. Rob Portman (R-Ohio), a House leader on the issue. "On the other hand . . . we are not going to be satisfied until it becomes law."

According to several Republicans, House and Senate leaders face two choices. They can opt for a more conservative bill, hoping to coax several Senate Republicans on board and daring Senate Democrats to filibuster. Or they can embrace the Senate version and hope that House Democrats – who voted heavily against the House plan -- will accept it.

House Majority Leader Tom DeLay (R-Tex.) warned Kennedy and others against drawing "lines in the sand" before the negotiations even start. While leaders from both parties said they hope to wrap up talks by the August recess, DeLay indicated yesterday that House leaders are willing to negotiate for weeks or months if their goals aren't met.