News and Commentary

In Medicare Bill, HMOs Got What They Wanted

When the dust cleared over how $35 billion in Medicare "givebacks" would be divided, the Republicans prevailed — Medicare HMOs got a bigger cut than Democrats wanted to give them. Now, President Bush may be poised to give Medicare managed care plans more.

The bill overwhelmingly passed a lame-duck Congress eager to go home — 79 members were absent at the vote. The measure, signed by then-President Clinton, restores $11 billion each to health plans and hospitals over five years, expands benefits, and increases payment rates for some procedures. The bill promises additional funds to health plans if Congress mandates new Medicare benefits. Karen Ignagni, president of the American Association of Health Plans, called the law a step toward preventing the "full-scale collapse" of Medicare+Choice.

Health plans may have even more reason to be optimistic. Before the election, Bush avoided the HMO-bashing of the Gore campaign that, in essence, made it difficult for Congressional Democrats to openly support higher payments to Medicare+Choice plans. Now, some observers say, Bush may be favorably inclined to further payment increases for health plans.

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