Washington Insider: Health Reform in Trouble, Medicare Advantage May Survive

Les Masterson, for HealthLeaders Media , May 7, 2009

A leading Washington healthcare expert is questioning whether any major healthcare reform will happen this year or even if the proposed Medicare Advantage payment cuts will get through Congress.

Robert Laszewski, president of Health Policy and Strategy Associates, LLC, in Washington, DC, has been outspoken in his belief that policymakers have simply not found enough money to fund major healthcare reform. For instance, a major healthcare reform effort supported by Obama would cost $1.2 trillion over 10 years, but federal leaders have only been able to find $316 billion over 10 years through payment reforms, he says.

Because lawmakers haven't found a way to fund a major healthcare plan, Laszewski says interests groups and Washington insiders are presenting their own Plan Bs, which include minor tweaks to healthcare rather than wholesale reforms.

"There is a whole other scenario starting to brew out there, and it's not clear what it's going to look like--but it ain't major healthcare reform," he says. "How it impacts Medicare Advantage is in no way certain."

Support for major healthcare reform is getting dimmer, he says. "The rats are headed off the ship . . . Everybody is covering their own butt," he adds.

Laszewski has predicted major Medicare Advantage payment cuts over the past two years because the Democrats oppose the program, but times are changing rapidly.

Healthcare reform is "floundering" on Capitol Hill and the Congressional Budget Office keeps rejecting healthcare reform funding programs.

Plus, Laszewski says so-called Blue Dog Dems, which are about 50 House moderate and conservative deficit hawks, have agreed to give a two-year patch to Medicare physician fee reductions, including the 21% cut planned for January 1. This in effect means that Medicare payments won't be required to follow the statutory pay-go requirement, which means that Congress won't have to find the $38 billion that would have been saved through physician cuts by cutting other programs. Instead, the $38 billion winds up being tagged onto the federal deficit.

Though Obama has been vocal in his opposition of Medicare Advantage and the need to cut health insurers' payments, Laszewski is not sure whether Congress will ultimately approve those cuts.

Medicare Advantage payment cuts have always been linked to physician payment cuts. The thinking has been that the money saved by paying private insurers less would offset delaying physician payment cuts for another year. Now, with physician payment reductions not following pay-go, Laszewski suggests that Medicare Advantage supporters could push to not make Medicare Advantage payment cuts because they won't need to offset the physician payment reductions.

"What I think is interesting this week is we have always tied the Medicare Advantage money to fixing the doc problem, but now that the docs seem to have worked a side deal and healthcare reform is floundering, there is a scenario you can paint that Medicare Advantage does not get touched this year," says Laszewski.

Les Masterson is an editor for HealthLeaders Media.

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