Senate Panel Backs Medicare, Medicaid Cuts
By Todd Zwillich

Wedesday 26 October 2005

Washington - Senate Finance Committee members passed a spending-cut package Tuesday evening, dropping just over $10 billion from the Medicare and Medicaid programs over the next five years.

The move is part of an overall Republican effort to cut $35 billion from the federal budget. The bill passed the committee over the objections of all nine of its Democrats, who opposed what they said was an inadequate effort to send health aid to victims of Hurricane Katrina.

The vote was the product of months of negotiations among committee Republicans, who struggled to find acceptable ways to cut billions from Medicaid, the health insurance program for the poor. Several moderates had opposed provisions that would increase recipients' out-of-pocket costs or cut benefits.

Instead, the senators found their savings largely through cuts in industry subsidies. The measure saves nearly $6 billion by boosting the rebates pharmaceutical companies must pay Medicaid for drugs sold through the program and by cutting payments to pharmacies. It also tightens policing of waste and fraud, and made it more difficult for beneficiaries to transfer personal assets in an effort to qualify for Medicaid's benefits.

Sen. Charles E. Grassley, R-Iowa, the committee's chairman, defended the bill as "a carefully crafted compromise" that achieved budget cuts without affecting benefits for poor or elderly patients, but that compromise required jettisoning most of an aid package Grassley had championed for victims of Hurricane Katrina.

Tuesday's bill included $1.8 billion in expanded Medicaid benefits for some Katrina victims in Louisiana, Alabama, and Mississippi, only a fraction of the nearly $9 billion Grassley had sought since the storm hit.

"People on my side of the aisle have stood in the way of the Hurricane Katrina package," he said, adding that he considered the $1.8 billion to be a "down payment" on further health aid for the region.

Still, Democrats pointed to the lack of broader relief for hurricane evacuees as the main motivator behind their unanimous opposition. "I cannot in good conscience join in cutting a healthcare bill when Congress has left the health care needs of Katrina's victims unaddressed," said Sen. Max Baucus, D-Mont., the committee's ranking member.

Democrats also railed against a provision that qualifies Alaska as the only non-Gulf state to receive increased Medicaid payments. Sen. John D. Rockefeller, D-W.Va., called the provision "outrageous."

Senators also agreed to boost doctors' Medicare payments by $10.8 billion over five years, a 1 percent increase, and replacing a scheduled 4.5 percent cut physicians' groups heavily opposed.

The vote was only the first in a long series needed before Congress agrees where - and how deeply - to cut healthcare spending. Two House Committees have begun deliberations on their own versions of the cuts, mostly leaving out Medicare and focusing on deeper Medicaid reductions.

Governors have formally asked Congress to consider giving them more flexibility to limit Medicaid benefits or increase recipients' personal spending under the program.

House and Senate versions of the cuts will have to be reconciled before the measure goes to President George W. Bush for signature