Medicare To See Legislation Cuts Instead of Doctors

WASHINGTON — Medicare will cut payments to insurers instead of doctors under legislation Congress enacted over President Bush's veto.

In overriding Bush's veto Monday, the Senate and House averted a 10.6% reduction in fees paid to doctors by Medicare, the American health program for the elderly and disabled.

Mr. Bush said he backed restoring the fees for doctors, although he opposed paying for it by cutting $12.5 billion over five years from insurance companies. The insurers, led by UnitedHealth Group Inc. and Humana Inc., provide care to about one in five Medicare beneficiaries. Now, the companies face the prospect of more cuts from Democrats who say the government pays too much, according to a health policy analyst, Bob Laszewski.

Insurers "should have used their political capital to get the best five-year transition they could" to reduced rates, said Laszewski, who is based in Washington, in a telephone interview today. "Now they have zero political capital, and they're just going to have it done to them next year. It was incredibly foolish."

The Senate voted 70-26 yesterday, more than the two-thirds needed, to override Mr. Bush's veto of the Medicare legislation. The House voted 383-41 earlier in the day.

The six-member Standard & Poor's 500 Managed Health Care Index, dominated by the biggest Medicare Advantage providers, rose less than 1% at 4:06 p.m. New York time. The index has fallen 4.6% since July 9, when the House first approved the legislation by a veto-proof majority.

The cut in doctors' fees was required under a formula Congress approved a decade ago to hold down Medicare spending. It has been set aside repeatedly in recent years, leaving physicians facing a 10.6% reduction on July 1. Health groups such as the American Medical Association, the largest organization for physicians, said the elderly would have a harder time finding doctors unless the cut was reversed.