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Democrats Scale Back Medicare ‘Doc Fix,’ COBRA Subsidy Extension In Jobs Bill

By Andrew Villegas

Democrats scrambling for votes ahead of a week-long Memorial Day recess have scaled back provisions that affect health care for newly laid-off workers as well as Medicare patients.ÌýÌý

On the table: two proposals to extend – once again – subsidies for COBRA health insurance and a “fix” of Medicare payments to doctors. Without action by the end of the month, those laid off after June 1 would have to pay the entire cost of continuing their health insurance and doctors could see their Medicare payments slashed by 21 percent.Ìý

And the legislation would also continue the extra federal payments to help hard-pressed stateÌýMedicaid programs.Ìý

The tax “extenders” billÌýextendsÌýunemployment benefits,Ìýa number of popular tax cutsÌýand funds small business loan programs.Ìý

Congress is considering several solutions on the COBRA, MedicaidÌýand Medicare payment issues butÌýthe bill is proving to be a tough sell to law to lawmakers – from both parties – wary of the new spending.

Doc Fix

In 1997, Congress put in place the Sustainable Growth Rate formula to set Medicare’s physician payments and curb the growth in health care costs. Based on the formula, whenever physician costs grew faster than the economy, doctors’ Medicare reimbursements would be reduced. However, every time – except once in 2003 – when this scenario has played out, lawmakers have intervened to delay theÌýunpopular cuts.

Here are some of the options that have been or are still being considered:

• A 19-month revised bill whichÌýwouldÌýpostpone scheduled cuts in Medicare payments to doctors for 19 months, while saving as much as $43 billion from the cost of the bill.ÌýUnder a plan that has been changed several times, payments to doctors would be increased 2.2 percent on June 1 and by 1 percent in 2011. But unless Congress acts again before the end of next year, physicians who care for Medicare patients would face a 33 percent reduction in payments starting in 2012, according to the Congressional Budget Office, which released a of the proposalÌýThursday. ThisÌýproposal would still cost nearly $22 billion, and the CBO estimates that the full bill will add $84 billion to the deficit. The deficit figure has led some – ÌýBlue Dog Democrats in the House – to reject this latest proposal.

•ÌýShort-term fix.ÌýAs some question the cost and timing of doing something this week, before the Memorial Day recess,Ìýanother month-long extension is a possibility, ÌýHouse Majority Leader Steny Hoyer.ÌýÌýSeparately, Republican Sen. ChuckÌýGrassley, R-Iowa, is preparingÌýa month-long fix proposal, according toÌý. Congress opted for such a short-term fix on April 15.

• AÌýdealÌýcrafted by Democratic leadersÌýand announced last weekÌýthatÌýwould include a for three years. Specifically, it would allow increases to the payment rates through 2011. In 2012 and 2013, rates would keep pace withÌýMedicare’s growth and an extra allowance would go to primary care doctors.

• A five-year, $88.5 billion plan that would give doctors scheduled pay increases.Ìý ThisÌýwas initially popular among some House Democrats but has less traction in the Senate and among some moderates because of the cost.

•ÌýA delay of the 21 percent cut until the end of the year.

The political dilemma is that members on both sides of the aisle are about adding to the deficit in a year that has already been marked by lots of spending.ÌýAnd the powerfulÌýAmerican Medical Association has steadfastlyÌýopposed shorter-term fixes, instead calling for a permanent solution.

Dr. James Rohack, president of the AMA, said in a release Thursday that a three-year fix would “provide temporary stability” for seniors and their physicians, but that the AMA is disappointed that Congress again won’t permanently fix the physician payment formula. “Achieving full repeal of the payment formula is apparently not feasible at this time, and Congress could have permanently solved this problem five years ago at a cost of $49 billion, less than the price of the short-term remedy now under consideration in Congress.”

The Congressional Budget Office has the cost of the permanent fix to be $276 billion through 2020.

COBRA Congress Ìýthe COBRA subsidies for unemployed workers four times since February 2009.

COBRA is the federal program that allows laid-off workers to stay on their employer’s health insurance, usually for as long asÌý18 months. But the former employee has to pay all the costs, something that is often cost-prohibitive. The COBRA pays 65 percent of the insurance premium costs for laid-off workers forÌý15 months.

The last extension of this subsidy was in April, for a month, and pending legislation would make it available to people laid off through the end of the year, at aÌýcost of $7.8 billion, though short-term proposals – in the form of another month-long extension – are also possible if agreement on the overall extenders bill can’t be reached.ÌýIf Congress doesn’t act, thoseÌýlaid off on or after June 1 would have to bear the full cost of their COBRA coverage.

Although a popular provision, the COBRA subsidy extensionÌýis caught up in the politics about government spending.

Judy Conti, federal advocacy coordinator for the National Employment Law Projects, says she sees COBRA being extended for as long as high unemployment rates continue, but she thinksÌýit’ll be a tough fight to keep the subsidy going into next year, saying there are some lawmakersÌý“who think that we’ve done enough and that this is it and no more,” she said. “But I don’t think that’s going to win the day.”

Medicaid Funding Boost For States With states facing a double recession whammy of less revenue and more demand for health care services, Congress included extra money to Medicaid programsÌýin the federal stimulus package beginning in February 2009.Ìý Before the stimulus, the federal government’s of Medicaid costsÌýwas between 50Ìýand 76 percent (depending onÌýthe per capita income of the state).ÌýÌýWith the stimulus, the federal match toÌýbetween 61Ìýand 84 percent of all Medicaid spending. The higher matching rate was originally slated to expire at the end of 2010, but the bill would extend the higher rates until June 30, 2011, at a cost of $24 billion.ÌýIn the most recent version of the bill, that provision escaped cuts.

The timing was crucial, according to Robin Rudowitz, the associate director for the Kaiser Commission on Medicaid and the Uninsured. “When we asked them last year, states reportedÌýthat the [stimulus funding]Ìýwas a total lifeline to balance theirÌýbudgets. While states still did make some cuts and restrictions, they overwhelmingly reported that things would have been a lot worse” without the funds, she said. (KHN is a project of the Kaiser Family Foundation.)

The timing on the extension could be helpful to states as well. Forty-sixÌýstatesÌýend their fiscal year June 30th, so if the extra federalÌý“match” endsÌýthis year, they could face the heavier Medicaid burden just halfway through their fiscal year.

Read related news summaries: Democrats Can’t Agree On Bill Which Includes ‘Doc Fix,’ COBRA Subsidy ExtensionÌý

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