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Looks like Senate liberals are fed up with Baucus. We saw in the past weeks them signing a public statement in favor of a strong public option.  We saw a sense of deep mistrust among the bloc about Baucus prerogatives in the past few weeks as he stalls reform. Now they write an open letter to Baucus in oppostion to his private deals with BIG PHARMA to close the Medicare Pt D doughtnut and lower drug costs.

These deals outside the legislative process wont save near as much money as drug price controls will. We the taxpayer will lose billions if the government is not directly involved in regulating drug costs. Some deal with pharma should be deeply mistrusted and certainly is by this liberal bloc of 22 senators.  They are warning Baucus-better worry about the Democratic Caucus-not the GOP or deals with industry.  Baucus is so worried about the GOP’s feelings and big business placations that he is losing a good number of senators over the manner and goals of his mystery bill. More below, including full letter.

Also HCAN has sent letters to all Blue Dogs pressuring them not to weaken the bill. See it below....

JULY 24, 2009, 2:16 P.M. ET
Democratic Senators Propose Medicare Drug Rebates

By ALICIA MUNDY
WASHINGTON -- Freshman Sen. Jeff Merkley of Oregon and 21 other Democrats have asked Finance Committee Chairman Max Baucus to require pharmaceutical companies to pay the government rebates on certain drugs provided under Medicare, as a way of helping fund a health-care overhaul.

Under the proposed rebates, drug makers would pay back to the government some of the difference between higher prices charged for medicine under Medicare and the lower prices that are charged under Medicaid. ...."We say we're trying to reduce costs, and this has been scored at $63 billion even if the companies only do rebates on low-income seniors," said Mr. Merkley in an interview Friday, referring to Congressional Budget Office estimates of how much the government might save over a decade through such rebates.

Early this year, brand-name drug makers and their lobby, the Pharmaceutical Research and Manufacturers of America, or PhRMA, began a campaign on Capitol Hill and at the White House to prevent rebates, which they call "price controls," from resurfacing in the health-care debate.
....

His letter says that if negotiation isn't permitted, the government should demand the return of Medicare D rebates, and that should be part of the Senate's health-care legislation. The letter's signatories include Sen. Barbara Mikulski of Maryland; Dianne Feinstein of California, and Chuck Schumer of New York.

...

PhRMA representatives have been pressing the White House for a promise to not back congressional rebate proposals, in return for industry support of the president's health-care package, according to several industry lobbyists and congressional staffers. An $80 billion deal on cost savings announced last month between the Senate Finance Committee, the White House and the pharmaceutical industry did not mention rebates.
Legislation that has passed two House committees and is under consideration in a third contains the Medicare rebate provision. A letter opposing the rebates, which includes industry language, has already attracted more than 60 signers in the House.

The White House declined to say whether it supports Medicare rebates in the legislation.
Mr. Merkley ...

http://online.wsj.com/...

Letter from 22 Dem senators demanding drug price controls, among other things, be in the healthcare bill to reduce costs to the govt and the tax payer.

Dear Chairman Baucus and Ranking Member Grassley:

The success of the health care reform effort hinges on whether we can find ways over the long-term to pay less for health care without compromising the goal of high-quality care for every American. This is an enormous challenge, but the fact that Americans pay more than twice as much as other industrialized countries for worse health outcomes indicate that there are tremendous inefficiencies embedded in the system. If we are to succeed in health reform, we cannot allow those inefficiencies to remain.

In that spirit, we urge you to consider strategies for further reducing the costs of the Medicare Part D drug benefit. The announcement in June that drug companies will cut their prices to partially fill the doughnut hole is encouraging, but more needs to be done. The price of drugs under Part D is substantially higher than prices obtained by programs where the government is permitted to negotiate for savings, such as the Department of Veterans’ Affairs (VA) – an average difference of 58 percent in 2007 for some of the most commonly prescribed drugs. Since the recent deal only pertains to pricing for beneficiaries in the doughnut hole, presumably these pricing differentials will remain equally great, if not greater, for a large portion of Part D purchasing. Reducing drug prices across the entire Part D program would lower health care spending and help Medicare beneficiaries by reducing premiums and their out-of-pocket costs.
There are several policy options that could accomplish this objective, including:

Allow Medicare to negotiate for Part D prescription drug prices by repealing the Medicare Modernization Act’s non-interference provision and directing the Secretary of HHS to negotiate directly where savings can be obtained.
Create a Medicare-administered Part D plan that would compete against existing Part D plans. A model with a workable formulary is outlined in S.330, the Medicare Prescription Drug Savings and Choice Act of 2009. Such a plan could also serve as a national default plan for low-income beneficiaries.
In lieu of direct negotiation, require pharmaceutical manufacturers to pay substantial rebates to Medicare for drugs delivered under Part D. At a minimum, Medicaid-level rebates should be required for drugs delivered to beneficiaries dually eligible for Medicare and Medicaid, as drug manufacturers were required to pay rebates for these beneficiaries prior to 2006. Some form of additional rebate should be required for other Part D beneficiaries to reflect the relatively high costs of drugs under Part D.
Substantial savings could be generated through sensible changes to the Part D drug benefit – savings that would benefit both taxpayers and the seniors and people with disabilities who rely on the program. Thank you, in advance, for your examining this opportunity further.

Sincerely,
Senators Merkley, Begich, Boxer, Brown, Burris, Casey, Dorgan, Feinstein, Franken, Harkin, Kaufman, Klobuchar, Leahy, Mikulski, Murray, Reed, Sanders, Schumer, Shaheen, Stabenow, Tom Udall, Warner and Whitehouse

http://merkley.senate.gov/...

---

Open Letter to Members of the Blue Dog Coalition July 25, 2009

Dear Member of the Congressional Blue Dog Coalition:

Health Care for America Now – the largest coalition working to enact a guarantee of quality, affordable health insurance for everyone in our country – is deeply troubled by the recent proposals made by some members of the Blue Dog Coalition. The stated demands of these Members – and the threat to block health care reform if they are not met – would effectively gut core elements of health care reform, such as:

• Pull affordability protections out from under millions of middle-income families, and cut assistance to lower-income families.

Prevent the public health insurance option from injecting competition into the highly-concentrated health insurance market, and weaken the ability of the public health insurance option to provide an affordable alternative for individuals and small businesses. As a result, costs will rise to families and businesses that purchase private and public health insurance in the Exchange and the health care bill will lose $75 billion in CBO scored savings.

Undercut a progressive financing mechanism that impacts only the top 1.2% of all households, and only 4.1% of small businesses, which is central to funding the protections for low and moderate- income families.

Access to health care services by everyone in America in every corner of America is a core HCAN principle, and adjustments in Medicare or other program operations need to be made if access is lacking. But, the willingness of some Blue Dogs to block the broader effort to expand coverage across all of America and lower the trajectory of health care inflation in order to placate their in-state providers is beyond the pale. We encourage members of the Blue Dog Coalition to reconsider this approach, and we encourage this be done before the reform process is even more seriously hindered. Taking health reform down this track is not productive to achieving health reform – and it could very well generate counter-charges that also would do little to advance health care reform and would give license to Republicans in their aim of blocking health care reform. The demands made by the Blue Dog coalition for the public option to negotiate rates would:

Increase the federal deficit by $75 billion. The CBO estimates that by tying the public option to Medicare rates the government will save $75 billion. Negotiated rates will lose that money as the CBO will not score rates that are negotiated. Where will that $75 billion come from, as the Blue Dogs say we need to spend even less?

• Raise the cost of health insurance to families and businesses in the Exchange. The higher negotiated rates will mean higher premiums for individuals and families in the Exchange, as with less competition from the public option rates rise across the board in private plans and the public option.

The demands made by the Blue Dog coalition to cut back subsidies would make health premiums unaffordable to millions of middle-class families in the Exchange, including in states represented by Blue Dogs. If families above $55,000 (300% of the federal poverty level) are not given any subsidies, they will be required to pay the full premium of $1,050 a month (a figure even before any adjustments for age rating); this is three times what members of Congress pay ($357/month). What is a middle-class income? The median family income in 2007 was $72,168. Some 14% of families earn between 300% and 400% of FPL in all states. The proposals by some Blue Dogs could lead members of Congress in other states to highlight:

The real revenue shift – now rural areas are the beneficiaries. Medicare rates are lower than the average in some areas of the country and higher than the average in others because Medicare payment rates are set at a level that "a reasonably efficient provider" would find adequate to cover costs of operation in the area. That is not unfair; it rewards efficiency and controls costs. In addition, a significant percentage of hospitals in rural areas can and do choose cost-based reimbursement under Medicare in order to receive higher revenues. The Democratic Caucus agreed this week, with the participation of some Blue Dogs, to address regional disparities in Medicare and institute value based pricing. These are important changes in H.R. 3200 that address concerns raised. Taxpayers in states with higher than average per capita earnings pay more into Medicare than taxpayers in states with lower than average earnings. Maryland residents, for example, are paying on average 46% more into Medicare than the average paid by residents in the eight most rural states in the country, and 80% more
than Arkansas residents, even though residents of Maryland receive the same Medicare benefit package as residents in these rural/low-cost states.

Billions in lower Medicaid contributions. The seven states represented by the Blue Dog hold-outs on the Energy and Commerce Committee contribute 35% less to their state’s Medicaid program costs than do the 20 states that pay the highest state share of Medicaid costs. The federal government—from taxpayers nationally—fills the gap in the low contributing states.
Blue Dog-represented states will gain by covering the most vulnerable. H.R. 3200 creates a national floor for Medicaid coverage at 133% of the FPL with the federal government picking up new costs. States that do not now cover residents up to 133% today – many of which are represented by Blue Dogs – will receive 100% federal funds to increase Medicaid to the 133% eligibility level. In particular, Alabama, Arkansas, Georgia, Indiana, and Louisiana will avoid assuming the costs of these new enrollees, saving these states billions. In contrast, states with broad coverage today for persons under 133% of FPL will receive no relief from these costs and are mandated to continue to spend state funds on their Medicaid recipients.
Blue Dog’s drive to cut middle-class protections would hurt middle-class families in all states . Some may be surprised to learn that the percentage of a state’s population between 300% and 400% of FPL is roughly the same across all states – an average of 14% plus or minus a couple percentage points. The protections against medical bankruptcy afforded these middle-income families under H.R. 3200 benefit a sizable segment of the population in all states. But under the Blue Dog proposal, a middle-income family of four earning $67,000 would lose critical financial protections. In addition, given that the national FPL guidelines do not take into account geographic differences in cost of living, the protections are particularly critical – and the potential loss of the protections would be particularly severe – for some families in some parts of the country. For example, a family earning $67,000 in Nashville, Tennessee would need to earn $86,000 to maintain the same standard of living in Alexandria, Virginia. Under the Blue Dog proposal, this middle-income family of four earning $67,000 would lose critical financial protections under H.R. 3200 no matter what state they live in.
Rural areas have a substantially higher percentage of residents on Medicaid than urban areas. Sixteen percent (16%) of residents in rural areas are on Medicaid today, compared to 11% in urban areas, resulting in millions in additional annual federal revenues to the state, particularly given the lower matching rate paid by these "rural" states.

"Low cost" state does not mean "efficient utilization" state. Some states with Medicare payment rates below the national average have health service utilization rates much higher than the average. One rural state has the following characteristics: the 9th highest hospital admission rate per thousand in the country; an outpatient visit rate that is 48% higher than the national average; three times the number of hospital beds per 1,000 population than the national average; and 50% greater inpatient hospital days per 1,000 population when compared to neighboring states and an incredible 18 times greater inpatient days compared to national averages.

We agree with Blue Dogs and others in Congress on the need to figure out ways to achieve greater savings in the health care system. And, in fact, H.R. 3200 identifies approximately $500 billion in savings. But we oppose approaches that merely shift costs on to middle-income families and the smallest of businesses rather than generate true efficiencies and higher value. Health care reform is not a one-time event. Implementation will be key, and changes to the legislation that is ultimately passed will be necessary. But H.R. 3200 puts the infrastructure in place to do what needs to be done: fix a dysfunctional insurance market, extend assistance to those who need it, and provide the mechanisms to continuously work to lower the trajectory of health care costs. We encourage those members of the Blue Dog Coalition who have threatened to block health care reform to reconsider. Crafting legislation is a process, involves many steps, but requires that we continue moving through each one. The alternative is neither attractive nor acceptable and would result in a failure to meet the needs of all of our constituents across the United States.

Sincerely, Richard Kirsch National Campaign Manager Health Care for America Now

More here on letters from HCAN and AARP to the Blue Dogs pressuring them to cease efforts to harm the public option among other issues!-http://thehill.com/leading-the-news/aarp-unions-target-blue-dogs-on-healthcare-2009-07-23.ht ml

Originally posted to pronin2 on Sun Jul 26, 2009 at 12:50 AM PDT.

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