Medicare Advantage: Congress rightly overrides President Bush's veto of a bill that levels the playing field between health-care providers

By Washington Post - Wed., July 16, 2008
WHY DID President Bush veto the Medicare bill, only to be swiftly overridden by both houses of Congress? It's not because he disagrees with the fundamental purpose, to reverse a 10.6 percent cut in Medicare payments to doctors. The administration's main beef is paying the cost, $13.8 billion over five years, by reducing projected payments to Medicare Advantage plans. These are the private plans -- HMOs or preferred-provider networks -- set up to compete with traditional fee-for-service Medicare, in which seniors go to doctors of their choice who accept Medicare reimbursements.

Medicare Advantage plans, which currently enroll about 20 percent of Medicare beneficiaries, could be a cost-effective alternative to traditional Medicare. The problem is that these plans now enjoy an undue advantage: They are paid, on average, 13 percent more per beneficiary than traditional Medicare costs. Numerous experts have recommended leveling the playing field between private plans and traditional Medicare. The legislation takes a few small, sensible steps in that direction.

How small? The savings from Medicare Advantage plans would amount to less than 2 percent of the money the government is projected to spend on them in the next five years. The Congressional Budget Office projects that enrollment in Medicare Advantage plans would still grow by 25 percent over that period. The changes would eliminate double payments for educational activities (since the plans don't engage in these) and impose new requirements on so-called private fee-for-service plans, which operate much like traditional Medicare but end up costing more.

The president said he vetoed the bill because "taking choices away from seniors to pay physicians is wrong." But no choices are taken away. The changes in the costly private fee-for-service plans, for instance, apply only in areas where at least two other Medicare Advantage plans are operating. Enrollment in these plans is projected to grow 39 percent by 2013 under the new rules. The CBO estimates only that the slightly more level playing field would result in about 2 million fewer seniors choosing the private plans than would have otherwise. It's telling that not even lawmakers of his own party were cowed by the president's effort to scare seniors.

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