June 12, 2008 -- Senate Republicans defeated an effort by Democrats to bring up a Medicare bill for debate on Thursday, and Democratic leaders conceded they will have to negotiate with the GOP on compromise legislation.
The bill (S 3101), by Senate Finance Chairman Max Baucus, D-Mont., is aimed at reversing a 10.6 percent cut in physician payments under Medicare that is scheduled to take effect on July 1. Doctors say the cut is unaffordable. They say they might refuse new Medicare patients if it takes effect, making the issue of paramount importance to Congress.
But Democrats and Republicans have been unable to agree on how to pay for averting the cut, the main issue in Thursday's 54–39 vote. Democrats needed 60 votes to win cloture—or end filibusters—on a motion to begin debate on the bill.
Under Baucus' bill, reversing the cut and providing doctors a 1.1 percent pay increase in 2009 instead would cost $9.9 billion through 2010, according to the Congressional Budget Office. Baucus would pay for the additional physician pay and other Medicare changes in his $19.8 billion bill primarily by cutting costs from Medicare Advantage, a program in which insurers provide seniors their health benefits in place of the government.
Medicare Advantage was created in the Republican Medicare overhaul of 2003 (PL 108-173) and remains strongly supported by many Republicans, including President Bush, who threatened to veto Baucus' bill on Thursday. But the Government Accountability Office, Congressional Budget Office, and Medicare Payment Advisory Commission have all said that Medicare Advantage plans are overpaid, compared with traditional Medicare, making them a target for Democrats.
Baucus defended his bill, arguing that it would not have a great effect on most Medicare Advantage plans. It would gradually eliminate bonus payments some plans receive for being located in areas with teaching hospitals. It also would limit the growth of one type of Medicare Advantage plan, called "private fee-for-service." Such plans are the most overpaid, according to the congressional advisory agencies.
"By far, the best option for getting a Medicare bill done this year is the bill on which we will vote today," Baucus said.
He said that if the cloture vote had succeeded he would have offered an amendment to the bill to delay for 18 months the Bush administration's plan to force providers of home medical equipment to bid for Medicare business.
Baucus said his amendment would have been identical to a bipartisan bill introduced by House members on Thursday to delay the bidding process.
Many lawmakers are concerned about the bidding process because suppliers of the equipment—known as durable medical equipment, or DME—have complained that they were unfairly prevented from bidding or that companies unfamiliar with the business won bids. Some seniors have said they worry that the confusing process could result in them losing access to needed medical equipment, like oxygen, walkers, and hospital beds.
DME suppliers contribute thousands of dollars to congressional campaigns; people associated with one large Ohio DME company, Invacare, have contributed more than $116,000 to congressional and presidential candidates in 2007–2008, according to CQ MoneyLine, which tracks campaign contributions.
Before the vote, Senate Majority Leader Harry Reid, D-Nev., refused to agree to a request from Republicans that he allow a cloture vote on an alternative Medicare bill written by the senior Republican on the Finance Committee, Charles E. Grassley of Iowa.
"We want to legislate on this important piece of legislation," Reid said of Baucus' bill. "It's not only a doctor's fix, it's a fix to our health care system."
Reid changed his vote from yes to no before the vote on the motion ended so he would have the ability to call the bill back up for a vote under parliamentary rules.
Democrats might have reached the 60-vote threshold if all members of their caucus had voted. Five missed the vote: Hillary Rodham Clinton of New York, Daniel K. Inouye of Hawaii, Mary L. Landrieu of Louisiana, Edward M. Kennedy of Massachusetts, and Barack Obama of Illinois.
The GOP Alternative
Grassley's bill would have provided doctors the same pay increase as Baucus' legislation, but without changes to Medicare Advantage private fee-for-service plans. To pay for his bill, Grassley would have eliminated the same bonus payments related to teaching hospitals that Baucus cut, and he would have made two small changes in Medicaid, the health entitlement for the poor, that together yield about $2.8 billion in savings, according to the CBO.
With the failure of the Baucus bill, Baucus and Grassley are widely expected to re-start stalled negotiations on a compromise bill.
"I hope we can pass what we have on the floor today," Senate Democratic Whip Richard J. Durbin of Illinois said, prior to the vote. "If we don't, we're going to have to consider reworking the package."
Their compromise bill likely would not make substantial changes to Medicare Advantage and will probably be more limited in scope than Baucus's bill, which included some improvements to Medicare benefits in addition to the increased physician payments.
"They will do what they should have done in the first place, which is to continue negotiations and bring a bipartisan bill to the floor," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell of Kentucky.