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Message to the House of Representatives
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For Immediate Release Office of the Press Secretary July 15, 2008

Message to the House of Representatives

ÿÿWhite House News


I am returning herewith without my approval H.R. 6331, the "Medicare
Improvements for Patients and Providers Act of 2008." I support the primary
objective of this legislation, to forestall reductions in physician
payments. Yet taking choices away from seniors to pay physicians is wrong.
This bill is objectionable, and I am vetoing it because:
  þ It would harm beneficiaries by taking private health plan options away
    from them; already more than 9.6 million beneficiaries, many of whom
    are considered lower-income, have chosen to join a Medicare Advantage
    (MA) plan, and it is estimated that this bill would decrease MA
    enrollment by about 2.3 million individuals in 2013 relative to the
    program's current baseline;
  þ It would undermine the Medicare prescription drug program, which today
    is effectively providing coverage to 32 million beneficiaries directly
    through competitive private plans or through Medicare-subsidized
    retirement plans; and
  þ It is fiscally irresponsible, and it would imperil the long-term fiscal
    soundness of Medicare by using short-term budget gimmicks that do not
    solve the problem; the result would be a steep and unrealistic payment
    cut for physicians -- roughly 20 percent in 2010 -- likely leading to
    yet another expensive temporary fix; and the bill would also perpetuate
    wasteful overpayments to medical equipment suppliers.

In December 2003, when I signed the Medicare Prescription Drug,
Improvement, and Modernization Act (MMA) into law, I said that "when
seniors have the ability to make choices, health care plans within Medicare
will have to compete for their business by offering higher quality service.
For the seniors of America, more choices and more control will mean better
health care." This is exactly what has happened -- with drug coverage and
with Medicare Advantage.

Today, as a result of the changes in the MMA, 32 million seniors and
Americans with disabilities have drug coverage through Medicare
prescription drug plans or a Medicare-subsidized retirement plan, while
some 9.6 million Medicare beneficiaries --more than 20 percent of all
beneficiaries -- have chosen to join a private MA plan. To protect the
interests of these beneficiaries, I cannot accept the provisions of this
legislation that would undermine Medicare Part D, reduce payments for MA
plans, and restructure the MA program in a way that would lead to limited
beneficiary access, benefits, and choices and lower-than-expected
enrollment in Medicare Advantage.

Medicare beneficiaries need and benefit from having more options than just
the one-size-fits-all approach of traditional Medicare fee-for-service.
Medicare Advantage plan options include health maintenance organizations,
preferred provider organizations, and private fee-for-service (PFFS) plans.
Medicare Advantage plans are paid according to a formula established by the
Congress in 2003 to ensure that seniors in all parts of the country --
including rural areas -- have access to private plan options.

This bill would reduce these options for beneficiaries, particularly those
in hard-to-serve rural areas. In particular, H.R. 6331 would make
fundamental changes to the MA PFFS program. The Congressional Budget Office
has estimated that H.R. 6331 would decrease MA enrollment by about 2.3
million individuals in 2013 relative to its current baseline, with the
largest effects resulting from these PFFS restrictions.

While the MMA increased the availability of private plan options across the
country, it is important to remember that a significant number of
beneficiaries who have chosen these options earn lower incomes. The latest
data show that 49 percent of beneficiaries enrolled in MA plans report
income of $20,000 or less. These beneficiaries have made a decision to
maximize their Medicare and supplemental benefits through the MA program,
in part because of their economic situation. Cuts to MA plan payments
required by this legislation would reduce benefits to millions of seniors,
including lower-income seniors, who have chosen to join these plans.

The bill would constrain market forces and undermine the success that the
Medicare Prescription Drug program has achieved in providing beneficiaries
with robust, high-value coverage -- including comprehensive formularies and
access to network pharmacies -- at lower-than-expected costs. In
particular, the provisions that would enable the expansion of "protected
classes" of drugs would effectively end meaningful price negotiations
between Medicare prescription drug plans and pharmaceutical manufacturers
for drugs in those classes. If, as is likely, implementation of this
provision results in an increase in the number of protected drug classes,
it will lead to increased beneficiary premiums and copayments, higher drug
prices, and lower drug rebates. These new requirements, together with
provisions that interfere with the contractual relationships between Part D
plans and pharmacies, are expected to increase Medicare spending and have a
negative impact on the value and choices that beneficiaries have come to
enjoy in the program.

The bill includes budget gimmicks that do not solve the payment problem for
physicians, make the problem worse with an abrupt payment cut for
physicians of roughly 20 percent in 2010, and add nearly $20 billion to the
Medicare Improvement Fund, which would unnecessarily increase Medicare
spending and contribute to the unsustainable growth in Medicare. In
addition, H.R. 6331 would delay important reforms like the Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies competitive bidding
program, under which lower payment rates went into effect on July 1, 2008.
This program will produce significant savings for Medicare and
beneficiaries by obtaining lower prices through competitive bidding. The
legislation would leave the Federal Supplementary Medical Insurance Trust
Fund vulnerable to litigation because of the revocation of the awarded
contracts. Changing policy in mid-stream is also confusing to beneficiaries
who are receiving services from quality suppliers at lower prices. In order
to slow the growth in Medicare spending, competition within the program
should be expanded, not diminished.

For decades, we promised America's seniors we could do better, and we
finally did. We should not turn the clock back to the days when our
Medicare system offered outdated and inefficient benefits and imposed
needless costs on its beneficiaries.

Because this bill would severely damage the Medicare program by undermining
the Medicare Part D program and by reducing access, benefits, and choices
for all beneficiaries, particularly the approximately 9.6 million
beneficiaries in MA, I must veto this bill.

I urge the Congress to send me a bill that reduces the growth in Medicare
spending, increases competition and efficiency, implements principles of
value-driven health care, and appropriately offsets increases in physician
spending.

GEORGE W. BUSH

THE WHITE HOUSE,

July 15, 2008.

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