Healthcare Reform Meets Standstill on Medicare Issue

By Peter Roff, Thomas Jefferson Street blog

Every time Harry Reid manages to get a step ahead on healthcare reform the members of his caucus force him to take two steps back. Last week's announcement that a deal had been struck—whatever that meant, since Reid would not make the details public—was accompanied by Nebraska Sen. Ben Nelson and Connecticut Sen. Joe Lieberman telling CBS' Bob Schieffer they couldn't support the bill, at least not in its present form.

These objections, in and of themselves, are apparently enough to stop healthcare reform cold, especially if all 40 Republican senators remain united in their opposition to the Reid approach. In fact, the calculations are growing much more complicated with each hour that passes.

Reid must now contend as well with growing unrest on his left flank. A group of Senate liberals, led by North Dakota's Byron Dorgan and Minnesota's Al Franken wrote last Friday to the majority leader about his proposed "compromise," expressing their concerns that the rumored Medicare buy-in program for Americans aged 55-64 Reid wants to incorporate into his healthcare bill would fail to address "inequities in the current Medicare reimbursement rates."

"Our states consistently lag behind other states on Medicare reimbursement and per capita spending," the 12 Democrats who signed the letter wrote. "While there are provisions in the Senate bill to eventually adjust the geographic disparities in Medicare, possible improvements to the funding formula, if they occur, will be years away," they said, adding, "the current Medicare payment structure penalizes those who provide efficient care, while rewarding those who order unnecessary tests and services."

In short, having seen Reid buy Louisiana Sen. Mary Landrieu's vote with $100 million, these 12 Democrats are asking for their fair share. According to Phil Kerpen, vice president for policy at the pro-free market Americans for Prosperity, the letter is a sign that senators from rural states are concerned that expanding Medicare without increasing reimbursement rates will drive more and more doctors into retirement.

"As more and more of their patients become Medicare patients and Medicare pays far below market rates," Kerpen says, "at some point it becomes impossible to shift costs to patients with private insurance," which would have the effect of turning large areas of rural states into healthcare deserts where no providers would be available.

Allowing that such an outcome would be a "political and public policy disaster" for the senators who let it happen, Kerpen says the only way to avoid it if a buy-in is allowed would be to boost Medicare reimbursement rates. And that, he says, "would obliterate the mirage of cost-containment in Reid's bill and expose every American to trillions of dollars in higher spending and debt." Which, no matter how you slice it, isn't exactly progress.

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