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The Hill - Left Boils as Obama Floats Major Change to Medicare Parts A and B

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By Elise Viebeck

The left is lashing out at a proposal to reform Medicare that President Obama said he would consider as a way to reduce the deficit.

Left-leaning groups and liberal lawmakers say that combining Medicare's doctor and hospital coverage would saddle beneficiaries with higher costs. The idea has attracted support from leading Republicans, and given Obama's receptiveness, the policy could receive significant attention in the next round of deficit-reduction talks.

This is exactly what senior advocates fear, and they are launching pre-emptive strikes on Capitol Hill to ensure lawmakers understand the downside.

"There's a feeling that beneficiaries should be paying more for Medicare, but they already pay a lot out of pocket," said Diane Lifsey, legislative representative with the National Committee to Preserve Social Security and Medicare.

"That's why we oppose this idea. The proposals are meant to save money, but they just end up costing beneficiaries," she said.

Combining Medicare's coverage for hospital and doctor care would unify Parts A and B under a single deductible.

Most proposals would enact a cap on catastrophic costs, and some include protections for low-income patients.

Critics say a unified deductible would raise expenses by hundreds of dollars for the vast majority of beneficiaries who do not use hospital care.

Supporters of the policy see Medicare's current benefit structure as outdated and argue that merging Parts A and B would improve accountability in the program.

The debate echoes another recent conflict between the White House and progressive Democrats over the chained consumer-price-index (CPI).

That policy would cut Social Security benefits by changing the way the program's cost-of-living increases are calculated, a move estimated to save $340 billion in federal spending over 10 years.

Obama proposed the policy as part of his 2014 budget, angering many Democrats on the Hill.

Liberals argue that neither "chained CPI" nor combining Medicare A and B serves seniors.

"This could just be a way to ask people to pay more for their premiums," said top Energy and Commerce Democrat Henry Waxman (Calif.) of overhauling Medicare's benefit structure. "It's just shifting costs."

Rep. Raul Grijalva (D-Ariz.), co-chairman of the Congressional Progressive Caucus, said uniting Parts A and B would be a "net loss" for patients.

"We've resisted it," he said. "Combining them is not going to control rising costs."

Chatter about the policy has risen on Capitol Hill since March, when Obama met with House Republicans and suggested he would support combining A and B as part of a "balanced" deal to reduce the deficit. Since then, Lifsey and her colleagues have been pushing back in a series of meetings on Capitol Hill.

"People are concerned that they will be presented with a large [deficit-reduction] package that includes this," she said.

The White House may not be the only player ready to save money with a Medicare redesign. It's also possible that Republicans will use combining A and B to fix the program's flawed physician payment formula.

Repealing and replacing the sustainable growth rate (SGR) is a major priority for doctors, who face an almost 30 percent pay cut every year from Medicare unless Congress intervenes. Republican committee leaders in the House have promised floor votes on SGR legislation in July or early August.

The GOP tends to be comfortable with dramatic reforms to Medicare, even those that would shift costs to beneficiaries.

Rep. Paul Ryan's (R-Wis.) politically charged budget proposals would save federal dollars by partially privatizing the program. Earlier this year, House Majority Leader Eric Cantor (R-Va.) argued that Medicare's current benefit structure recalls insurance trends from half a century ago.

"We can modernize Medicare so it isn't so complicated for seniors or healthcare providers," Cantor said in a speech to the American Enterprise Institute. "We should begin by ending the arbitrary division between Part A, the hospital program, and Part B, the doctor services."

Several weeks later, the House Ways and Means subcommittee on Health examined Medicare's benefit design in a hearing. The panel's GOP chairman, Rep. Kevin Brady (Texas), argued that the status quo is confusing for seniors and forces many to purchase supplemental coverage.

"No private insurance company in its right mind would design and offer a benefit that looks like this, and given the choice, most seniors wouldn't accept it," Brady said.

Non-partisan experts pushed back, citing the precarious financial situation of many seniors.

Tricia Neuman, a Medicare expert with the Kaiser Family Foundation, acknowledged that reforming Medicare's benefit design would serve patients with "truly catastrophic medical expenses" not covered by supplemental insurance. But she predicted that creating a combined Part A/B deductible of $550 would raise costs on about 29 million beneficiaries.

"Recent benefit redesign proposals would provide real help to a small share of the Medicare population, but raise costs for the majority of beneficiaries -- many of whom have modest incomes," Neuman said in prepared testimony.

AARP, the powerful senior lobby, made a similar argument in a Feb. 26 letter to Brady.

"Most [Medicare] beneficiaries already struggle to make ends meet, and are particularly sensitive to the high cost of healthcare and prescription drugs," wrote AARP senior vice president for government affairs Joyce A. Rogers.

"An examination of Medicare redesign must take into account the economic status of seniors," she said.


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