With Medicare vote, G.O.P. splitting from Bush

Washington - If President Bush opts to exercise his veto threat on a Medicare bill this week, he can no longer count on Republicans to back him up.

That's the political fallout from last week's surprise Senate vote that saw 18 Republicans – including nine who reversed previous stands – vote with all Democrats to block a mandated 10.6 percent cut in payments to physicians who treat Medicare patients. On the House side, 129 Republicans broke with the White House in a June 24 vote on the bill.

If these votes hold, Congress wields more than a vetoproof, two-thirds majority in both houses. The lopsided votes are already spurring talk among Democrats of reviving previously vetoed legislation, such as a bid to expand the State Children's Health Insurance Program (SCHIP).

"This legislation sends a tremendous message to the American people, and, I hope, paves the way for bipartisan activity," said Senate majority leader Harry Reid after the July 9 vote.

On Monday, White House spokesman Tony Fratto said that Mr. Bush still plans to veto the bill, as early as Tuesday. Despite the lopsided vote – 355 to 59 in the House and 69 to 30 on a key procedural vote in the Senate – the president is committed to opposing a bill that "denies seniors healthcare choices they otherwise might have," Mr. Fratto says. In addition to physician pay cuts, the bill also proposes cuts to Medicare Advantage, a private Medicare plan that aims to create competition and, over time, lower health costs by fostering creativity. The Bush administration had delayed implementing the physician pay cut until July 15.

"There's unquestionably a bigger-picture issue here: Congress refuses to look at ways to rein in costs to the Medicare program, and any single effort to do so they choose to turn into partisan fight. The Democrats will try to paint [Republicans] as people who want to cut health costs for seniors, so people trying to reform the program are left in this very dangerous situation," Fratto says.

Some Republicans opposing the bill predicted that they could still muster enough support to prevent an override.

"I see this as a process success for Harry Reid, who was able to link the doctors fix to reelection politics in November," said Sen. Richard Burr (R) of North Carolina after the vote. "It's a vote against privatization and for universal healthcare. When a number of Republicans realize what they have done, they will encourage the president to veto this bill," he added.

But the mood in much of the GOP caucus was more subdued. "I don't know why the president would veto this bill with a significant vote on both sides of the aisle," said Sen. Michael Enzi (R) of Wyoming, who opposed the bill. "People will just stay with their votes to be consistent – and the vote would be the same."

In fact, these votes mirror a pattern of Congress deferring mandated cuts in physician fees. The "sustainable growth rate" system for determining annual physician fees was set up in the Balanced Budget Act of 1997 in a bid to rein in soaring entitlement costs. In 2002, the SGR system reduced fees by almost 5 percent, but it has been deflected by legislative action since 2003.

Without a legislative fix, many doctors currently in the Medicare system would probably opt out of it, say lawmakers who backed the bill. "The California Medical Association tells me that if those mandated cuts [in physician fees] took place, we could lose 60 percent of doctors who currently take Medicare patients," says Sen. Dianne Feinstein (D) of California.

But critics say that view ignores a longer-term entitlement crisis. "Congress is preventing what would otherwise be a significant reduction in fees paid to Medicare to go into effect, but it in no way solves the fundamental problem of Medicare in general – or the very significant problem of how we reimburse physicians and the perverse incentives of the current system," says Gail Wilensky, a senior fellow at Project Hope in Bethesda, Md., and former chair of the Medicare Payment Advisory Commission from 1997 to 2001.

The current system encourages and rewards physicians who do more and complex services, she says. "Even once we are able to reconfigure how we pay physicians under Medicare, which is one of the most serious issues we need to face in the short term, the long-term unfunded liability of Medicare is staggering," she says.

Health experts estimate that the current unfunded liability of Medicare is more than $70 trillion.

"This is Kabuki theater that happens every year: Congress promises cuts in Medicare reimbursement rates for doctors, because it's the low-hanging fruit, rather than making structural changes. Every year, they reverse themselves and don't do it," says Michael Tanner, senior fellow at the Cato Institute.

"In the end, we're going to end up not making any changes in the Medicare system at all, and we're hurtling toward insolvency," he adds.