This letter was sent to all members of the Senate

The United States Senate
Washington , DC

Dear Senator:

On behalf of the more than 4.6 million members and supporters of the National Committee to Preserve Social Security and Medicare, I urge you to reject the budget reconciliation conference report.

Unlike the spending reduction bill that passed the Senate, the conference report contains substantial cuts and detrimental changes to programs that serve our nation's seniors. In many respects, the conference report includes harsher budget cuts to low-income individuals than the original House bill. Congress is asking seniors who live on fixed incomes to absorb a disproportionate share of budget cuts, while drug companies and many health care providers are shielded from negative consequences.

We believe the following provisions in the conference report are particularly harmful to seniors:

• The conference report largely mirrors the House bill which allows states to impose premiums and to increase cost-sharing for many categories of beneficiaries and services. States could, for the first time, let providers turn away someone who needs care if the beneficiary cannot afford the copayment. The Senate recognized the negative aspects of increasing cost sharing and did not include these provisions in its reconciliation bill. Including cost sharing requirements may produce a budgetary savings but only because needy beneficiaries are now forced to forgo Medicaid services.
• The conference report includes more severe asset transfer provisions than either the House or the Senate bills. Two provisions in the conference report will make it increasingly difficult for seniors to qualify for long-term care services under Medicaid:

  • The conference report increases the look back period from three years to five years. This change is unnecessarily punitive because only the most recent asset transfers are likely to have occurred with any thought of Medicaid eligibility. It creates barriers to care and requires record keeping and documentation requirements that are far beyond the normal practices.
  • The conference report delays the start date of the penalty period for asset transfers. (Under current law, the penalty period begins when the individual transfers the assets. Under the conference report, the penalty period begins when the individual becomes eligible for Medicaid.) This change makes it even more difficult for people who are in need of Medicaid coverage to receive benefits. It also means that nursing homes will have to provide uncompensated care.
• The conference report includes a new provision that was not in earlier bills that would accelerate the means-testing of the Part B premium from a five-year phase-in period to a three-year phase-in period. We have always believed that means-testing Part B erodes the equitable and fundamental nature of the Medicare program. We oppose the acceleration of this process.
• The conference report fails to fully implement the risk adjustment process which prevents overpayments to Medicare Advantage plans. Currently, these plans are receiving extra payments from the federal government. The conference report includes risk adjustment provisions for five years and then allows Medicare Advantage plans to receive the overpayments again after the five-year budget window.
• The conference report does not include the Senate's language that eliminates the regional Preferred Provider Organizations (PPOs) stabilization fund. This stabilization fund contains $10 billion that is intended to encourage PPOs to participate in Medicare. In light of the heavy participation of PPOs in the program today, it is clear private industry is interested in participation in the program without the additional incentives. Even the Medicare Payment Advisory Commission (MedPAC) has recommended that this stabilization fund be eliminated. Eliminating it would produce $5.4 billion in savings over the next five years, which could protect beneficiaries from even harsher cuts contained in the conference report.
• The conference report prevents physician payments from being cut in 2006 and instead freezes payments at the 2005 level. Although we agree physicians should be adequately compensated, each time the cuts to physician reimbursement rates are averted, seniors bear part of the costs by paying higher Part B premiums. This premium increase will be imposed in addition to the increase that reflects inflation in other Part B health services, and on top of increases that have already almost doubled the Part B premium since 2000. We believe that beneficiaries should not have to pay unexpectedly higher premiums in 2007 because of the changes in physician reimbursement rates.

The National Committee supports deficit reduction because of the impact of deficits on programs important to seniors such as Social Security and Medicare. But the cuts incorporated in this bill will be borne by those who are least able to bear the burden, while Congress has made it clear that any revenue saved will be spent on tax cuts primarily for the wealthy.

We urge you to vote against the conference report.

Cordially,