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Health Care and Banking
Congress, doctors defeat insurers, lame—duck Bush
By Nicole Lucht / Staff Writer

President Bush has made no secret of his attempts to privatize Medicare, the federal health insurance program for people age 65 and older and many disabled.

But on July 15 Congress sent a clear message to the lame-duck president with a veto override. That is, doctors' pay will be protected for the next 18 months and bonus payments to private health insurers will be cut.

The override is a victory for Democrats, who have long touted health care reform. Many Republicans also voted to override the veto.

And with a new president taking office next year, the bill gives the newcomer some cushion to figure out a solution for the embattled program.

Medicare Advantage was created through the Medicare Modernization Act of 2003, which also created tax-deferred health savings accounts and the Medicare prescription drug program.

Although it's not a new concept - Medicare + Choice preceded it - Medicare Advantage was the program insurers were able to latch onto and turn a profit.

Medicare Advantage is a federally funded plan offered through private health insurance companies. It's available to Medicare beneficiaries deemed eligible by insurers.

In June 22.7 percent of the 43 million Medicare beneficiaries were enrolled in Medicare Advantage plans and 39.9 percent were enrolled in prescription drug plans, according to data released by the Kaiser Family Foundation, a nonprofit health care policy organization.

In 2006 the government spent $59 billion on Medicare Advantage plans, insurers receiving a monthly payment per patient. It's estimated that Medicare spends 12 percent more on patients enrolled in Medicare Advantage than those enrolled in the traditional program.

Most insurers also receive additional payments.

With a budget shortfall in the trillions of dollars and the oldest of the 78 million Baby Boomers three years from being eligible for Medicare, Congressional leaders were looking for a way to preserve Medicare services while cutting away the fat.

Medicare Advantage plans are supposed to offer benefits above what traditional Medicare offers, such as dental and vision care, but as the Government Accountability Office reported in February, that is not always the case.

The report also found that some Medicare Advantage enrollees had their coverage reduced, especially for high-priced care, such as cancer and stroke treatment.

Bush, in a message to Congress before it overrode his veto, said senior citizens would lose choice of plans.

But because only a fourth of Medicare beneficiaries are enrolled in the program, it makes sense to preserve programs for every beneficiary instead of the few who decide to go the private route.

It seems that every year, doctors are lobbying Congress to protect their pay. This time, they managed a 1.1 percent increase to their reimbursements, fending off a 10.6 percent cut.

The bill, called the Medicare Improvements for Patients and Providers Act, also protects 9 million military service members, retirees and their families enrolled in Tricare, another federal health program that bases its rates on Medicare.

The cuts divert $14 billion that was originally budgeted for health insurers over to physicians.

Other items in the bill:

  • More services for early disease detection should be covered by Medicare;

  • Agents and brokers will have to be licensed by the state to sell Medicare Advantage plans;

  • The Health and Human Services Department has been directed to make grants available to state health insurance assistance programs and aging and disability resource centers.

    Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-8832 or nicole.lucht@lasvegassun.com.

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