Monday, July 21, 2008

Medicare Update

Last week, I posted about the proposed 10.6% cut in Medicare payments and its impact on the healthcare system. Since then, President Bush vetoed a bill that would reverse this scheduled change, but Congress overruled his veto:

But the House voted, 383 to 41, on Tuesday afternoon to override the veto. Soon afterward, the Senate voted by 70 to 26 to do so. Although the Senate vote was close enough to provide some suspense, it was still over the two-thirds needed, as a number of conservative Republicans who typically side with the president broke with him on this issue.

The bill cancels a 10-percent cut in payments to doctors that would otherwise occur automatically because of a statutory formula that reduces payments when spending exceeds certain goals. The president said he supported the main objective of the bill, to forestall reduction in physicians’ payments, but that he had too many reservations about other aspects of the legislation.

Mr. Bush said he opposed the bill in part because it would reduce federal payments to private Medicare Advantage plans, offered by insurers like Humana, UnitedHealth and Blue Cross and Blue Shield. In his veto message to Congress, Mr. Bush also complained that the bill would “perpetuate wasteful overpayments to medical equipment suppliers.”

It will be interesting to see how this plays out the next time there is a scheduled change in Medicare payments. The current system seems untenable in the long run, but with all the vested interests, it seems like it will be hard to change the status quo anytime soon.

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