    [Public Papers of the Presidents of the United States: George W. Bush (2008, Book II)]
    [July 15, 2008]
    [Pages 1028-1030]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the House of Representatives Returning Without Approval the
    ``Medicare Improvements for Patients and Providers Act of 2008''
    July 15, 2008

    To the House of Representatives:
        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:

        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;
        It would undermine the Medicare prescription drug program,
                which today

    [[Page 1029]]

                is effectively providing coverage to 32 million
                beneficiaries directly through competitive private plans or
                through Medicare-subsidized retirement plans; and
        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

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    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.