Rural Health Care and Medicare Advantage Plans--A Sacred Cow for Both Republicans and Democrats?

If you have been reading this site for any time you know that I believe the Democrats are going to cut Medicare Advantage payments to the HMOs the first time they get their hands on the federal budget (see earlier post).

But I also think there may be an exception to what will generally happen to Medicare Advantage (MA) HMOs--payments to plans operating in "rural" areas.

The original Medicare Modernization Act of 2003 (that created MA plans and Part D) passed in great part because of the support of "rural" Senators--both Democrats and Republicans. Right at the top of that list is Charles Grassley (R-IA) who chaired the Senate Finance Committee at the time. A key Democratic Senator from a rural state who made passage possible was Max Baucus (D-MT). Baucus worked closely with his good friend and partner Grassley on the Medicare bill. Now, Baucus is running the all-important Senate Finance Committee.

These "rural" Senators were brought onside, in part, because of the payment levels MA plans and Part D plans were going to get in the rural areas. The rural Senators wanted assurance that coverage would be provided to their constituents just as it would be in the larger markets. A longtime complaint among this group had been the lack of access to private Medicare plans in the rural areas under the old funding arrangements.

If you need any evidence for how rural Senators work together to safeguard rural health care you only need look at a group of seven Democratic Senators, led by Senate Majority Leader Harry Reid (D-NV), who are criticizing the Bush budget for the cuts it would make to some of their favorite rural health care programs.

The group of seven Democratic Senators also includes Lincoln (AR), Dorgan (ND), Conrad (ND), Klobuchar (MN), and Salazar (CO).

I do believe that Medicare Advantage payments to HMOs will be cut in the next year--in great part because of what the powerful House Committee Chairs, all big city guys who hate Medicare Advantage, will do.

I also believe that the rural Senators--Democrats and Republicans--will work to mitigate those cuts in the rural areas to protect the gains they finally got for their constituents under the Medicare Act in 2003.

Payment differentials for rural areas are not new. Prior to the 2003 Act, payments for Medicare PPOs were better in the rural areas then they were in the big cities because of the influence of the rural Senators.

The longterm outlook for Medicare Advantage may be better in the rural areas then it will be in the rest of the country.