Congress Approves Medicaid Reform, Digital TV Bill; Legislation Now Awaits Bush's Signature

New Reports Highlight the Benefits of Medicaid Reform

WASHINGTON - The U.S. House of Representatives Wednesday gave final approval to historic reforms to save Medicaid and to bring television into the digital age, legislation crafted by the Energy and Commerce Committee under U.S. Rep. Joe Barton's chairmanship.

On a 216-214 vote, the House passed the legislation (S. 1932) for a second time due to the delaying tactics of some Senate Democrats. The digital television (DTV) provisions and the Medicaid restructuring were contained in a larger budget "reconciliation" bill that also reduced the national deficit.

"In June 2004, at my first DTV hearing since becoming chairman of the Energy and Commerce Committee, I announced that expediting the DTV transition would be a top priority," said Barton, R-Texas, on the House floor before the vote. "I also noted that the 85-percent loophole in current law has delayed the consumer benefits of digital television and preventing the clearing of very vital broadcast spectrum for critical public safety and wireless broadband uses.

"The DTV legislation brings needed certainty to allow consumers, broadcasters, cable and satellite operators, manufacturers, retailers, and government to prepare for the end of the transition," Barton said. "It includes a strong consumer education measure. And it helps ensure that all consumers have continued access to broadcast programming, regardless of whether they use analog or digital televisions, or whether they watch television signals broadcast by a local station or subscribe to pay-TV."

Barton has long argued that the bill "will mean enhanced television for millions of Americans, cutting-edge new services in the marketplace, and better communications capabilities for first responders."

"We now have three years to prepare for the transition," Barton has previously said about the bill. "That is more than enough time for manufacturers and retailers to move low-cost digital televisions and converter-boxes into the market, for the FCC to complete the channel allocation process, for broadcasters to finalize their digital facilities, and for government and industry to prepare consumers for the transition."

"Medicaid is a victim of its own success," Barton reiterated during the Wednesday debate. "The program has grown so expensive that it is unsustainable in its current form.

"The nation's governors understand the grim future of Medicaid without reform," he said. "They told us over and over again in our hearing that Medicaid will begin to bankrupt the states unless some reasonable reforms are enacted. They were Democratic governors and Republican governors. They told us what they needed done and we attempted to do it.

"Our proposal contains common-sense reforms and will help fix some of the flaws in the current Medicaid program to ensure that it can continue to be the safety net that protects our nation's most vulnerable citizens," Barton added. "The reforms in this legislation include allowing states to charge basic co-pays to higher income beneficiaries, reducing Medicaid overpayment for drugs, and providing states with the flexibility to tailor their benefit package to meet the specific health care needs of beneficiaries. We'll also make it difficult for lawyers to hide assets so wealthy clients can pretend to be poor enough to qualify for long-term Medicaid coverage in nursing homes.

"I recognize that some critics will argue that even modest reform will hurt the poor. I would submit to you that Medicaid in its current form is hurting the poor," he said.

Two findings recently released highlight the benefits of Medicaid reform. A Jan. 31 Congressional Budget Office report notes the salutary effect of better targeting limited Medicaid resources.

CBO estimates that in the next ten years, as a result of Medicaid reform:

• 115,000 disabled children will gain Medicaid coverage;
• 120,000 beneficiaries will be able to access home- and community-based services; and
• 100,000 people will leave nursing homes and instead receive long-term care services in their community.

The second analysis, by research firm Thomson Medstat, found that children covered by Medicaid are nearly six times more likely to be treated for severe obesity than children with private insurance, according to the Associated Press. Medicaid reforms approved by Congress today will allow states to tailor benefits to better serve special needs patients, like diabetics, while current law mandates governors offer a one-size-fits all benefit.

Specifically the DTV legislation:

* Establishes a February 17, 2009 hard deadline for the end of analog broadcasting, freeing critical spectrum for public safety and wireless broadband use, and is expected to generate at least $10 billion in auction revenues.

1 Authorizes the National Telecommunications and Information Administration (NTIA) to create a digital-to-analog converter box program to help over-the-air viewers continue to receive broadcast programming.

* The bill allocates up to $990 million for the program, which will enable households that make an affirmative request to receive by U.S. mail up to two, $40 converter-box coupons. This will help minimize participation by consumers who do not need a subsidized converter-box.

1. The NTIA may use up to $100 million of the $990 million for administrative costs. Up to $5 million of the administrative funds may be used to educate consumers about the digital television transition and the digital-to-analog converter-box program.
2. If NTIA certifies to Congress that it needs more money to fulfill the program, the overall amount available increases to up to $1.5 billion and the administrative amount available increases to up to $160 million.

* The bill also makes up to $1 billion available for a grant program to help public safety agencies obtain and deploy interoperable communications systems.

1 Note: Most consumers should be unaffected by the February 17, 2009 deadline, and will not need an over-the-air converter box.

* Less than 15 percent of households rely exclusively on over-the-air broadcasts.

1. The remaining 85 percent subscribe to a multichannel video programming distributor (MVPD), such as a cable or satellite operator. Cable and satellite operators can convert digital broadcast programming to analog-viewable format for these households.

The Medicaid reforms are based on recommendations from all 50 governors, Democrats and Republicans alike, and authored by the House Energy and Commerce Committee. They will accomplish the following goals:

1. Give states greater flexibility to provide services - Medicaid covers newborn babies and seniors alike, but state officials are forced to offer a one-size-fits-all program. States will have greater flexibility to better target scarce resources and offer coverage that better meets each patient's needs. The most vulnerable groups, including children, pregnant women and seniors will see no changes at all.
2. Root out wasteful over spending on pharmaceuticals - The government routinely overpays for prescription drugs for beneficiaries. In fact, Medicaid could pay $5,336 for a prescription that only cost the pharmacist $88 to obtain. The Department of Health and Human Services inspector-general found in 2002 that Medicaid reimbursements exceeded pharmacists' true costs by $1.5 billion. Every dollar wasted on overpayments is a dollar that does not go to treat patients. The bill sets more realistic reimbursement rates for medicines based on the average manufacturers price (AMP). Starting in 2007, the federal government will not pay more than 250 percent of the AMP of the lowest-cost version of a generic drug. For the first time the AMP will be publicly available, which CBO estimates will save taxpayers hundreds of millions of dollars in overpayments, and could also help private health plans negotiate better drug prices.
3. Encourage personal responsibility - Today Medicaid lacks any meaningful co-payment for services, no matter the cost. As a result health care costs predictably take a back seat in today's "free" system. In a typical example, at one Georgia hospital 29% of emergency room patients were seeking care for common, maladies like ear infections and the flu. That's roughly 29,000 patients and $5.6 million wasted in 2004 in one ER alone. The legislation lets states enforce a co-payment of as much as 20 percent for a prescription drug or service (but to never exceed 5 percent of a family's annual income) and allows that amount to be adjusted for inflation. A demonstration program will also allow governors to offer Health Opportunity Accounts modeled after the Health Savings Accounts that are rapidly-growing in the private health care market.
4. No more Medicaid for millionaires - Increasingly middle and upper-income seniors are transferring or hiding assets to appear impoverished and, thus, entitled to Medicaid coverage for long-term care services. The legislation extends the "look-back" period from three to five years to provide greater scrutiny of such "Medicaid planning" financial transactions and bans anyone with more than $750,000 in home equity from Medicaid eligibility altogether. Congress should ensure Medicaid dollars support only the truly needy and encourage long-term care insurance and other options for those who can pay.
5. The bill would also require states to use basic identification documents to better enforce current law and prevent illegal aliens from getting Medicaid coverage.

Other health care issues included these:

Hurricane Katrina Aid - The plan allocates more than $2 billion to help Alabama, Louisiana and Mississippi cover Medicaid expenses. Specifically, the legislation waives the three states' "match" or share of Medicaid costs incurred between August 28, 2005 and May 15, 2006.

Medicare physician payments - the legislation repeals a scheduled 4.4 percent cut in payments to physicians treating Medicare patients. That cost was offset by reducing payments to Medicare Advantage plans, requiring higher-income Medicare beneficiaries to pay higher premiums, cracking down on the over-use of medical imaging services, lowering payments for home health services and other changes.

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