Power Has Shifted in Medicare Debate

When presidential candidates fly into Iowa this month, they will be greeted with a message tailor-made for them. An enormous billboard at Des Moines International Airport tells them to “turn around and get back on your plane” if they are not committed to increasing Medicare funds for the state.

The billboard spotlights a festering health-care problem in rural America -- and a potent political issue that quietly has helped drive legislation through Congress that would reform Medicare.

Officials in rural communities have long complained that under federal law, doctors and hospitals in their areas often receive smaller Medicare payments than those in big cities do. That disparity, they say, has driven away doctors in droves -- a stampede contributing to what many see as growing health-care deficiencies in small towns and villages.

Provisions to reduce the payment disparity were included in the Medicare reform bills approved by the House and Senate in late June -- a carrot of more than $25 billion for rural lawmakers who provided crucial votes needed to pass the measures.

But some lawmakers from Los Angeles, New York and other urban areas are worried that, as the details of a final Medicare bill are written in the coming weeks, the pressure to cater to rural areas will come at the expense of doctors and hospitals in big cities.

“It’s a zero-sum game,” said Rep. Xavier Becerra (D-Los Angeles). “It’s not that you want to deprive rural communities, but you don’t want to do it at the expense of poor older folks in urban areas.”

The $25-billion windfall is, in part, a testament to the increased clout of rural areas in a government dominated by Republicans. GOP lawmakers are more likely to represent rural districts than Democrats are. And the White House has a political interest in responding to the requests of largely rural states because they tended to back George W. Bush in the 2000 election against Democrat Al Gore.

“Take a look at the political map,” Becerra said. “You’ll find the [states Bush carried] got most of the rural-community relief” in the Medicare measures.

It is not uncommon for disputes over Medicare and other issues to pit urban and rural districts against each other. Former House Ways and Means Chairman Dan Rostenkowski (D-Ill.) often battled to protect his Chicago district’s interests against the Farm Belt interests of his Senate counterpart, Senate Finance Committee Chairman Bob Dole (R-Kan.). In one dispute, Rostenkowski expressed his lack of interest in a farm-related bill bluntly: “I don’t have a ... blade of grass in my district.”

This year’s Medicare debate was shaped by an alignment of forces that enhanced the clout of rural interests.

The two key leaders of the Senate Finance Committee, which wrote that chamber’s Medicare bill, are from rural states: Chairman Charles E. Grassley (R-Iowa) and Max Baucus (D-Mont.).

And in the House -- where urban lawmakers traditionally dominate because a state’s number of seats is based on population -- rural lawmakers formed a well-organized voting bloc that proved essential to passing that chamber’s version of the bill. The measure was approved by a one-vote margin, 216 to 215.

Rep. John E. Peterson (R-Pa.), chairman of the Congressional Rural Caucus, said he and the group’s other members had been prepared to vote against the bill if the additional Medicare payments for their areas had not been included. “This is a long-overdue policy change,” said Rep. Jim Nussle (R-Iowa).

Congress’ main focus in the Medicare debate was on provisions that would establish prescription drug benefits and expand the role of the private sector in the program.

But rural lawmakers seized the opportunity to try to change the way Medicare reimburses doctors and hospitals for treating the elderly. Under current rules, the payments vary by region, based on local costs of labor and other factors in health-care delivery. That means rural doctors and hospitals are generally paid less than their counterparts in more costly urban areas. For some services, the variation is as much as 38%.

Rural lawmakers say that sets up a powerful incentive for doctors and other medical specialists to leave rural areas for places where reimbursements are higher. The problem has been acute in Iowa. According to the Iowa Medical Society, the state ranks 49th in its physician-to-patient ratio, and 50th in the ratio for certain specialists.

Overall, only 11% of the nation’s doctors practice in rural regions, where 20% of the U.S. population lives, according to the National Rural Health Assn.

Doctors in Iowa, site of the opening presidential caucus in January, are hoping to take advantage of the state’s high political profile to highlight the payment issue. The Iowa Medical Society is financing the billboard at the airport, and plans to post on its Web site candidates’ statements on the subject.

The Senate Medicare bill would provide $25.3 billion over 10 years -- beginning in 2005 -- to increase rural health reimbursements. The aid proposal was crucial to winning support for the entire bill from many Senate Democrats, including Minority Leader Tom Daschle of South Dakota, who objected to other parts of the measure.

The increased reimbursements for rural areas, sponsored by Grassley, would be added to the bill’s overall cost of $400 billion. That’s a key difference with the House’s version of the bill.

The House measure would provide $27.2 billion in additional reimbursements for rural areas over 10 years, beginning in 2004. But the cost of the overall bill would remain capped at $400 billion. To help stay within that target, the House measure would reduce scheduled increases in reimbursements to hospitals throughout the country.

These are among the disagreements House and Senate negotiators will seek to settle in the coming weeks. Most attention will focus on the House bill’s greater emphasis on allowing market forces to shape a program that has been heavily regulated. But finding a balance between rural and urban interests may prove just as crucial to whether a compromise bill is approved.

“It’s like a seesaw,” said John Feehery, spokesman for House Speaker J. Dennis Hastert (R-Ill.) “If you give too much to the rural guys, the urban guys get up in arms. You have to find that balance.”

Grassley first won approval of the rural aid initiative as an amendment to the $350-billion tax cut package Congress passed this year. The amendment was approved 86 to 12; its opponents included California’s senators, Democrats Dianne Feinstein and Barbara Boxer.

A Feinstein aide said she opposed it because its costs would have been offset by cuts in Medicare funding that she believed would hurt cancer care and urban hospitals. Boxer voted against the amendment because it “did nothing for California,” said her spokesman, David Sandretti.

Only about 70 of the state’s 470 hospitals are considered rural, according to the California Health Care Assn.

Grassley agreed to drop the amendment from the tax bill after winning Bush’s commitment to support it as part of the Medicare legislation.