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Baucus has held down the fiscal impact of his legislation by proposing to cut a hefty $500 billion in Medicare costs. The bill claims to do this by trimming a lot of fat out of the system and setting up an independent, nonpartisan panel that will take away Congress's power to set Medicare payment policies and reimbursement rates. But, most controversially, the bill takes a big chunk of money from the Medicare Advantage program, which essentially subsidizes insurers. "We are committed to working with policymakers and stakeholders to find savings in the Medicare program, including Medicare Advantage, but it is important to ensure seniors' health-care choices are protected," said a statement from America's Health Insurance Plans, the powerful lobbying group that represents private health-insurance companies.
While proponents argue that today's seniors will feel little or no difference in their levels of coverage, many Medicare beneficiaries are still worried, as was evident during August's heated town halls. In response, several Senators have introduced legislation to scale back those cuts. "I will offer an amendment to grandfather in all the senior citizens on Medicare so that they're not going to be cut from the Medicare Advantage," said Florida Senator Bill Nelson. He plans to offset that by asking pharmaceutical firms to apply the same rebates they currently give to Medicaid patients to Medicare recipients. "That pays for a lot and more," he insists.
Baucus would expand Medicaid coverage, which currently tops out for people who make 100% of the poverty level, to 133% of that level ($29,327 for a family of four), a shift that is expected to cover an additional 10 million Americans, including childless adults who have previously not been eligible for the program. Medicaid, however, has always been a partnership between the states and the Federal Government, and Baucus wasn't willing to absorb all of the costs of expanding the program. Under his proposal, the Federal Government would pay most of the new Medicaid costs: at least 80% in wealthy states like Connecticut and up to 95% in poorer ones like Mississippi.
The problem is that in the current economy, a number of already cash-strapped states can hardly afford Medicaid at current levels, let alone an expansion. Ohio, for example, would likely have had to cut back on its existing Medicaid benefits if it hadn't been for the stimulus funds the state received earlier this year. Many people on Medicaid also would be absorbed into the so-called exchanges in which lower-income people would purchase their insurance, a move that some Democrats don't like. "Everybody gets to keep the insurance they have except if you're poor, and that's the State Children's Health Insurance Plans, which is drawn into the exchange, and a lot of Medicaid," Rockefeller said, adding that he planned several amendments to fix the Medicaid provisions in the bill.