Introduction

Congress ended 2007 by failing to adequately address two of the biggest health care issues before it: Protecting the integrity of the Medicare program from the assault of privatization, and reauthorizing and extending the State Children's Health Insurance Program (SCHIP). Filibuster threats by Republican Senators prevented the Senate from considering the comprehensive Medicare and SCHIP legislation passed by the House of Representatives in August (H.R. 3162). On top of that, the president threatened to veto any legislation that placed limits on Medicare private plans. Impermissible limits that would have triggered a veto included reductions in lavish subsidies to private Medicare plans and new beneficiary protections against marketing abuses - despite on-going reports of such abuses by private plans.[1]

Instead of taking comprehensive action, the Senate continued until 2008 the fight to protect access to health care for older people, people with disabilities, and children. On December 18, 2007, the Senate passed by unanimous consent the Medicare, Medicaid, and SCHIP Extension Act of 2007 (S.2499). The House of Representatives passed the Extension Act on December 19. President Bush is expected to sign the bill into law.

Provisions of the Extension Act

The most widely-reported provision of the Extension Act is its replacement of the expected 10% cut in physician payments with a 0.5% increase in payments through June 30, 2008. The Extension Act also contains provisions relevant to individuals eligible for Medicare, SCHIP, and Medicaid. The Extension Act:

• Extends the Qualified Individual (QI) program for 6 months, through June 30, 2008.

• Extends SCHIP funding through March 31, 2009.

• Extends the exception process through which Medicare beneficiaries may continue to receive therapy services after they have reached the payment cap through June 30, 2008.

• Extends the Transitional Medical Assistance program (TMA), providing health care for the children of low-income individuals who are transitioning from welfare to work through June 30, 2008.

• Provides funding for beneficiary outreach and assistance to State Health Insurance Assistance Programs (SHIPs) [$15 million] and to Area Agencies on Aging and Aging Disability Resource Centers [$5 million].

The Extension Act includes a few provisions related to private health insurance plans:

• Authority for Medicare Advantage special needs plans (SNPs) is extended through December 31, 2009. However, a moratorium is placed on new plans and expanded service areas through that date.

• Authority for managed care plans authorized as cost plans, not as Medicare Advantage plans, is extended through December 31, 2009.

• $1.5 billion is removed from the stabilization fund for regional Medicare Advantage plans (referred to as the slush fund) in 2012.

Other provisions relate to provider payments, including payments to rural physicians, long-term care hospitals, and inpatient rehabilitation facilities.

Looking forward to 2008

Because the Extender Act only addresses the expected physician fee cuts through June 2008, Congress needs to begin addressing a more permanent solution starting in January when it returns from winter recess. Congressman Charles B. Rangel (D-NY), chairman of the House Ways and Means Committee, issued a press release expressing his disappointment in the legislation that was passed and his commitment to passing legislation "that is more than a stopgap fix" in 2008. Senator Charles Grassley (R-IA), ranking minority member on the Senate Finance Committee, was quoted as saying that he was disappointed that Congress could not pass a larger package, but that the Extender Act will give the Finance Committee more time to address some of the larger issues.[2]

Stopping the privatization of Medicare through continued overpayments of Medicare Advantage plans remains the priority issue for the Center for Medicare Advocacy. In 2008, Congress needs to address true Medicare reform by protecting the integrity of the traditional Medicare program by eliminating subsidies to private plans. Instead, Congress should help all Medicare beneficiaries by improving programs that assist beneficiaries with limited incomes, eliminating cost-sharing for preventive benefits, creating parity in cost sharing between mental health and other services, and adding consumer protections to Parts C and Part D.

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[1] Robert Pear, "For Recipients of Medicare, the Hard Sell." The New York Times, December 17, 2007, http://www.nytimes.com/2007/12/17/us/17medicare.html.

[2] Kevin Freking, "Lawmakers craft reprieve for medical pay." Houston Chronicle, December 19, 2007, http://www.chron.com/disp/story.mpl/ap/politics/5388728.html.