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Bush Administration Medicare proposals would increase Prescription Drug Benefit Premiums for higher-income beneficiaries, require use of EHRs

[Feb 19, 2008] The Bush administration on Friday issued a legislative proposal that would increase Medicare prescription drug benefit premiums for higher-income beneficiaries, cap noneconomic damages in medical malpractice lawsuits and require health care providers to implement electronic health records, The Hill reports.

The administration issued the proposal as required by the "trigger" provision in the 2003 Medicare law. Under the provision, which took effect after Medicare trustees estimated for a second consecutive year that federal general fund revenue would finance more than 45% of total program costs within seven years, the president must submit a Medicare savings proposal to Congress (Young, The Hill, 2/15). The administration announced the proposal in a letter from HHS Secretary Mike Leavitt to House Speaker Nancy Pelosi (D-Calif.) (Lee, Washington Post, 2/16).

Leavitt said that the proposal would function in conjunction with the fiscal year 2009 budget request that President Bush released earlier this month. According to Leavitt, the budget request would reduce Medicare spending by $178 billion over five years, and the proposal would "lay out a foundation for transforming Medicare" (Johnson, CongressDaily, 2/15).

Rx Benefit Premiums, Malpractice Cap
One provision in the proposal would increase Medicare prescription drug benefit premiums for individuals with annual incomes of at least $82,000 and couples with annual incomes of at least $164,000. Under the provision, premiums would triple for individuals with annual incomes of at least $205,000 and couples with annual incomes of at least $410,000. The provision initially would affect fewer than 5% of Medicare beneficiaries but would affect more over time because the annual income levels would not adjust for inflation (Pear, New York Times, 2/16). The provision would save an estimated $900 million in 2013 and almost $3.2 billion over five years thereafter, according to the administration (Lueck, Wall Street Journal, 2/16).

A second provision in the proposal would cap noneconomic damages in malpractice lawsuits at $250,000 per case and reduce the length of time during which patients can file such lawsuits (Washington Post, 2/16).

EHRs
A third provision in the proposal would require the HHS secretary to develop and implement a nationwide interoperable EHR system. The system would have to make personal health records available to Medicare beneficiaries (Reichard, CQ HealthBeat, 2/15). In addition, the provision would require that HHS:

Provide Medicare beneficiaries with cost and quality data to help them select among medical treatments, physicians, hospitals and health plans (New York Times, 2/16);

Group data on medical treatments by "episodes of care," which would compare all related aspects of care;

Provide incentives for beneficiaries to use more efficient health care providers and preventive services that can reduce costs;

Guarantee a transition into Medicare for individuals with health savings accounts; and

Implement a system under which some Medicare reimbursements vary based on quality and efficiency of care.
The provision also would allow HHS to release measurements of quality and efficiency for physicians (CQ HealthBeat, 2/15).

Next Steps, Response
The trigger provision in the Medicare law requires that the majority and minority leaders in each congressional chamber or a designee introduce the proposal as a bill within three legislative days. According to CQ Today, although "aides to both parties' leaders had previously declared the bill more or less dead on arrival," administration officials "disagreed." Leavitt said, "We broadly consulted with members of both the Senate and the House and we anticipate that (the proposal) will be met, at least by Republicans, with broad acceptance and interest" (Armstrong, CQ Today, 2/15).

Democrats "quickly criticized" the proposal, according to the Washington Post (Washington Post, 2/16). According to Senate Finance Committee Chair Max Baucus (D-Mont.), although the provision in the proposal that would increase Medicare prescription drug benefit premiums for higher-income beneficiaries is an "attractive option" to help fund other priorities, such a "major change ... should only be considered in a broader review of the benefit" (Wall Street Journal, 2/16).

NPR's "All Things Considered" on Friday reported on the Bush administration's Medicare proposal. The segment includes comments from Leavitt, Republican Study Committee Chair Jeb Hensarling (Texas) and Richard Kogan, an economist at the Center on Budget and Policy Priorities (Rovner, "All Things Considered," NPR, 2/15). Audio of the segment is available online.