Current Medicare reform bill only a start, not a finish

If history is any indication, the legislation will need a lot of correction.

By Markian Hawryluk, amednews staff. Nov. 3, 2003.

Washington -- Although Congress has yet to complete a Medicare reform bill that would add an outpatient prescription drug benefit, experts are already predicting that lawmakers will need to fix it if it passes.

And that's not out of the ordinary.

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Topic: Medicare payment

"We have in this country a long and cherished tradition of enacting seriously flawed legislation that we then spend the next decade cleaning up and repairing," said Robert Reischauer, PhD, senior fellow of economic studies at the Brookings Institution, a think tank in Washington, D.C.

Dr. Reischauer was director of the Congressional Budget Office from 1989 to 1995 and is on the Medicare Payment Advisory Commission.

It was on his watch that Congress repealed the Catastrophic Coverage Act of 1988, the last time lawmakers seriously considered a Medicare prescription drug benefit. But Dr. Reischauer said mending laws, not overturning them, is the approach that Congress usually takes.

The pressure to develop a far-reaching bill in a limited amount of time in a politically charged atmosphere with hundreds of billions of dollars at stake is what usually drives passage of faulty legislation.

Congress is still revisiting policy from the Balanced Budget Act of 1997. That ended up cutting billions of dollars more in Medicare spending than was intended, prompting Congress to pass the Balanced Budget Relief Act of 1999 and the Benefits Improvement and Protection Act of 2000.

The budget act introduced the sustainable growth rate formula for calculating Medicare physician updates. Earlier this year, lawmakers averted a second year of deep cuts in physician payment stemming from errors in estimates used to calculate the SGR. Nevertheless, unless Congress acts again this year, physicians will face a 4.2% cut in Medicare payments as a result of the law's language.

Howard Cohen, a health care lobbyist who served as lead counsel for the House Energy and Commerce Committee during the passage of the budget act, said this year's Medicare bill will be no different.

"It will be a flawed bill, but every bill in Congress in health is a flawed bill," he said. "That's just the nature of the beast. We try to write legislation on 15% of the [gross domestic product]. It's very difficult then to judge its impact. Later on, it's impossible."

Both Cohen and Dr. Reischauer agree that a desire to see a Medicare bill pass means lawmakers will look the other way on certain issues and then try to correct or add to the bill in coming years. If Congress can't agree on the legislation this year, the task will be much more difficult next year because it is an election year, the budget situation might worsen and demographic trends will drive up the cost of the drug benefit.

"There is a feeling that we have a rare window of opportunity to expand the Medicare program in a very significant way, we should jump through that window now because if we don't, it's going to be a long, long time before it opens again," Dr. Reischauer said. "So there are many who would say because of this opportunity, I will hold my nose, I will shut my eyes but in the end I will vote for it."

With few legislative days remaining, the complexity of the bill could also become a factor, said AARP Policy Director John Rother. "On some of these issues, there may be a handful of staff and two or three members who really understand the ins and outs."

And even critics of the bill will find it difficult to walk away, said Marilyn Moon, PhD, a Medicare trustee and director of health at the American Institutes for Research.

"The dilemma that makes a lot of people who find a lot of flaws in this bill pause is that there's $400 billion out there -- inadequate to solve the problem but a lot of money," Dr. Moon said. "It's very hard to say let's just give that up and hope next year it's still on the table, considering the size of the deficit and other demands on the federal government at this time."

Congress will find a way to compromise to get the reform bill passed this year and then work to improve the benefit later on, predicted Joseph Antos, PhD, a Medicare policy analyst with the American Enterprise Institute, a Washington, D.C., think tank.

"I think there's little doubt that if the kinds of benefits that we've seen so far in the House or Senate bills were to pass, that there would be tremendous political pressure starting immediately and probably being realized with actual legislation in 2005 to do something about it," he said.