Thursday, September 6, 2007

Medicare Advantage Reform Puts SCHIP Reform At Risk

This is the kind of inside the beltway story I find fascinating. Before the August recess the House passed a SCHIP reauthorization bill. The Senate passed its own bill. The bills were assigned to a conference committee for harmonization before final passage. The House bill is more expansive than the Senate bill. Both are several times more expansive than the President wants and he has threatened to veto anything that doesn't track what he wants.

The Senate's version passed with a veto proof majority. The House bill's passage was closer to a party line vote. Harmonizing the two bills would seem to be a no brainer. The conference should agree on a version of the bill that looks a lot like the veto proof Senate bill. Veto threat thwarted. We can all spend our time worrying about other things.

House conference committee members are saying "not so fast." They want their bill. Democrats in the House are serious about PAYGO. They claim that, in part because their bill cuts wasteful spending in the Medicare program, their bill is really less expensive than the Senate bill. They refuse to budge. According to OpenCongress Blog

At the center of the debate in Congress is a controversial Medicare reform provision that Democrats in the House are insisting must remain intact.
House Democrats don't believe we should waste any more tax money on a very expensive but failed conservative experiment--the Medicare Advantage program. Conservative Republicans would rather waste money than face reality.

Never forget that conservative wingnuttery is a civil religion as well as a political movement. At the core of the civil religion is belief that "the free market god" is an all powerful god that is always capable of magically delivering goods and services to the public better and cheaper than the public sector. That belief is an article of faith. Anyone who questions that article of faith is a heretic who will burn in DMV hell.

Some years ago the conservative priests decided to use the Medicare program to prove the power of their "free market god." They enacted a program called Medicare Advantage to demonstrate the magic of the market. Essentially, Medicare Advantage pays private insurers to provide free market health care alternatives to traditional Medicare. By law those alternatives must be as good as the traditional Medicare program. The government picks up the bill. If the "free market god" has the power conservatives believe insurance companies should be able to prosper by cutting the out fat of the government program. They should also provide better services than the recipients would otherwise receive. The worshipers of the "free market god" were so sure of the power of their god's magic that initially they agreed the government would pay insurance companies 95% of what they were paying for the same services under traditional Medicare. That didn't work so soon the law was amended to pay insurance companies the same amount per service the government was paying under traditional Medicare. The free market really isn't magic so that didn't work so . . . .

Over time the per service cost of the program has grown. Taxpayers are now paying Medicare Advantage providers 120% of what we are paying for the same services under traditional Medicare. Adding insult to injury, Medicare Advantage isn't all that popular with seniors. Robert A. Berenson of the American Prospect as the full rundown.

The bottom line is that Medicare Advantage has evolved into a kind of corporate welfare program for insurance companies. It is very expensive and except for a few insurance companies sucking at the government teat nobody would miss it.

The Democrats want to partially pay for expanding SCHIP by cutting Medicare Advantage payments for services back to 100% of the payments being paid by regular Medicare for identical services. A lot of money could be saved without adversely affecting anybody except the insurance companies. Ezra Klein has more.

Did I say corporate welfare? Why, yes I did. Who always favors corporate welfare? Republicans always favor corporate welfare. Maggie Mahar of the Health Care Blog asks the essential question, "Who needs the money more - UnitedHealth or the kids?" A lot of Republicans vote for Unitedhealth.

What is ironic about all of this is that while House Democrats are trying hard to cut fat to pay for the needed SCHIP expansion, Republicans are trying just as hard to protect one of their corporate welfare queens.