[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.