Medicare bill: How 11 minutes of bipartisanship solved 12 years of frustration

For 12 years, Congress has been passing a temporary 'doc fix' to patch a hole in Medicare. This year, however, John Boehner and Nancy Pelosi saw an opportunity to fix it permanently. Now, the Senate must agree.

Pablo Martinez Monsivais/AP/File
House Speaker John Boehner of Ohio is handed the gavel by House minority leader Nancy Pelosi in January, after being re-elected for a third term to lead the 114th Congress in Washington. The House is expected to vote Thursday on replacing the current Medicare formula for reimbursing doctors with a new approach. It calls for a period of basically stable reimbursements, followed by gradually shifting a larger share of doctors' pay so that it's keyed to quality, rather than quantity, of service. The Medicare fix is packaged with an extension of children's health insurance, funding for community health centers and dozens of other provisions. The outlook in the Senate is unclear.

It took exactly 11 minutes for Republican House Speaker John Boehner and Democratic minority leader Nancy Pelosi to strike a broad deal on the first structural reform of Medicare since President Obama took office.

But it took 12 years to get there.

For more than a decade, lawmakers have been unable to agree on a permanent way to shield doctors from steep cuts in Medicare reimbursements. Since 2003, Congress has struggled to merely patch the cuts – 17 times so far. That struggle came to an end in the House on Thursday, when lawmakers overwhelmingly backed a bipartisan compromise, 392 to 37.

“This is a major accomplishment,” says William Hoagland, senior vice president at the Bipartisan Policy Center, a Washington think tank.

First, he says, it’s bipartisan, which is no small achievement in today’s political climate. This is especially true when it comes to popular entitlement programs such as Medicare that are considered too politically sacrosanct to touch.

Second, it starts to move Medicare from a fee-for-service system to one in which providers are rewarded for the quality they provide, not the number of services they perform. That shift is “the holy grail” of health reform, Mr. Hoagland says, because it “improves patient outcomes at less cost.”

Third, the House bill partially pays for the permanent fix by having the wealthiest Medicare patients pay higher premiums for doctors and prescription-drug coverage. That approach, called “means testing,” chips away at the egalitarian underpinnings of the program – a hard swallow for Democrats – but it is one way to address rising health-care costs.

After so many years of patch jobs, why did this deal happen now?

The immediate trigger was a deadline, as is often the case in Washington. This year’s temporary “doc fix” is set to expire March 31, when Medicare reimbursements to physicians are scheduled to decline by about 20 percent.

But the bigger reason was that Speaker Boehner (R) of Ohio saw an opportunity to work with Representative Pelosi (D) of California on a way to help pay for a permanent doc fix.

“The problem has always been finding a bipartisan agreement on the ‘pay-for,’ ” said a GOP aide familiar with the negotiations in an e-mail. “In the past, Democrats have always insisted on additional tax hikes or additional tax revenue as a precondition. This time, they did not.”

As Boehner put it to reporters, “The door opened, and I decided to walk in.”

On the afternoon of March 4, Boehner did just that. He made a rare visit to Pelosi’s office on the second floor of the Capitol. It was brief meeting, just between the two of them, though their top health aides had been in preliminary discussions for a month already.

That quick Boehner-Pelosi summit got the ball rolling on an agreement that was then hammered out among their staffs, and between the Ways and Means and Energy and Commerce Committees. It was highly unusual that Boehner began with Pelosi, whom he usually turns to only as a last resort, after he has run out of options with his own caucus.

“This is, in my view, the proper way to legislate,” said House minority whip Steny Hoyer (D) of Maryland. “The two parties have been working together through their leadership,” he told reporters this week.

In the end, the final deal involved compromises for both sides.

In exchange for increases in payments for the highest-earning Medicare patients, Democrats got two years of continued funding for the Children’s Health Insurance Program, which expires on Sept. 30. The program helps children whose families are low-income, but are not poor enough to qualify for Medicaid.

The bill also provides two more years of funding for more than 1,200 community health centers nationwide. 

But higher patient premiums, as well as payments by providers, do not fully offset the cost of the bill – and that’s the compromise that Republicans had to accept.

According to the nonpartisan Congressional Budget Office, the Medicare bill will cost $214 billion over the next decade. But $141 billion would not be covered by the pay-fors, and thus add to the deficit. 

Conservative groups such as Heritage Action for America, which scores Republicans on their votes, urged a “no” vote on the bill because it’s not fully paid for.

But many Republicans, even some of the most conservative ones, decided that the benefit of actually starting to reform Medicare outweighed the cost issue.

“There’s no point in subsidizing health care for wealthy people,” said Rep. John Fleming (R) of Louisiana.

The bill’s future is uncertain in the Senate, though President Obama on Wednesday signaled his general support. Some Democratic senators have objected that the Children’s Health Insurance Program is extended for only two years instead of four. Pelosi, too, wanted four years, but as Congressman Hoyer stated, they simply did not have the votes in the House for that.

Another problem for some Senate Democrats has been abortion-funding restrictions that apply to the community health centers – the so-called Hyde Amendment that forbids federal funding of abortion except in the cases of rape, incest, or the endangered life of the mother.

But even the leaders of the House “pro-choice” caucus argue that the bill’s language provides no additional abortion restrictions beyond what would otherwise already apply.

The Senate is now in a deadline jam. It’s expected to work late into the night on a budget and dozens of amendments, then break for a two-week recess. House members will leave town at the end of the day Thursday. 

If Senators can’t agree on the House bill, one option would be to pass a short-term patch. But Democratic leaders in the House seem confident the Senate will pass the bill.

As for what this deal portends for the future, analysts such as Hoagland are very cautious. This agreement – just one stab at a much bigger problem – had its own stakeholders and circumstances and can’t be easily replicated.

“There was more gain than pain” for politicians, Hoagland says. That can’t be said for other major issues with entitlement programs.

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