Sen. Max Baucus (D-Mont.) has balked at cutting Medicare benefits as a way to cut the deficit, a task he is charged with as chairman of the powerful Senate Committee on Finance.

“We must work together to reduce our deficit, but we cannot do it on the backs of seniors,” Baucus said in a June 2011 hearing of the Senate Finance Committee, which he chairs. “We need to continue to modernize our system and make it more efficient — not reduce Medicare benefits or stick seniors with a bigger bill.”Baucus was a member of the super committee, the bipartisan group of lawmakers that tried and failed to devise a plan to cut $1.2 trillion from the nation’s deficit by the late-November deadline, in part, because of differences on how to reform Medicare. Baucus repeatedly stated that Medicare benefits would not be cut.

Baucus helped write President Obama’s 2010 Affordable Care Act (ACA), and was instrumental in pushing it through the Senate. Now, components of the ACA are in jeopardy as House Republicans target Medicare benefits as part of their deficit reduction plan. Furthermore, the Supreme Court will be hearing a challenge to the individual mandate component of the act, which stipulates that certain citizens must purchase insurance. A ruling on the constitutionality is expected in June 2012.

The House Republican plan calls for substantial changes to Medicare, starting in 2022. At that time, seniors would receive a government credit toward buying insurance on the private market. The beneficiary would have to make up the difference between the credit and the price of the insurance. Another component in the House proposal would reopen the Medicare Prescription Drug Plans (Part D) coverage gap, known as the “donut hole,” which is the difference between the initial coverage limit and the catastrophic coverage threshold for prescription drugs. Baucus says reopening this hole would double seniors’ out-of-pocket health care costs, and analysts expect him to remain steadfast in his support of the ACA.

In an interview with The Medicare NewsGroup, David Kendall said that Baucus will “be the last person to make any major changes to the law.” Kendall is a senior fellow for health and fiscal policy at Third Way, a Washington, D.C.-based progressive think tank that helped advise legislators and the White House on the health care reform legislation.

The Democrats’ approach to cutting costs has been, in part, to cut payments to providers. Baucus supports the ACA’s efforts to create a quality-based provider payment system, in which higher-quality providers will ultimately be paid more than lower-quality providers. However, many industry experts say that likely will not happen.

Medicare is “not nimble enough to make quality distinctions about providers that people will trust,” said James Capretta, a fellow at the conservative-leaning Ethics and Public Policy Center, a Washington, D.C.-based think tank, in an interview with The Medicare NewsGroup. “Instead, they just end up paying everyone the same. Senator Baucus keeps assuming that Medicare is going to do business differently and move from that blunt across-the-board cutting approach. I have serious doubts that’s going to work.

In early December, along with Sen. Tom Harkin (D-Iowa), Baucus touted a report from the Government Accountability Office (GAO) showing significant decreases in premiums and gains in enrollment in Medicare Advantage Plans. These plans, often referred to as Part C or MA, are offered by private companies approved by Medicare. These Part C plans may offer extra coverage from traditional Medicare, including vision, hearing, dental or health and wellness programs. Traditional Medicare includes Hospital Insurance (Part A) and Medical Insurance (Part B).

The report, commissioned by Baucus and Harkin, showed that from 2010 to 2011, enrollment in these plans increased by 6 percent, and the average monthly premium declined by about 14 percent. Baucus points to the lower premiums as evidence that the ACA is showing progress in controlling costs.

To be sure, many analysts say that in order to dramatically reduce spending on Medicare, the program will have to change to a more competition-based system.

“Senator Baucus is an impediment to genuine Medicare reform,” Capretta said. “He stands in the way of making the kind of progress we need to make to fix the system. That’s because he believes that CMS (the Centers for Medicare & Medicaid Services) has the capacity to engineer a more cost-effective program through regulation. The way to make it more cost-effective is through a competitive structure.”

Still, the Montana senator is known for his ability to work with Republicans, who favor Medicare reform that limits the government’s unfunded liability and transfers more of the financial burden to the beneficiaries. His ability to hold on to his seat in the traditionally Republican state is a testament to his willingness to break with his party on some issues. Many Democrats considered it a betrayal when Baucus supported former President George W. Bush’s tax cuts in 2001. In 2003, Baucus was one of only two Democrats to help Republicans pass the Medicare Prescription Drug Plan (Part D).

“After the election, we will know what Congress looks like and who the president is,” said Robert Laszewski, president of Health Policy and Strategy Associates LLC, a health care consulting firm, in an interview. “The country is going to need some bipartisan compromise, but (representatives and senators) are not going to be willing to tell you what they’re willing to give on before the election.”

 -- by Susan Pasternak for The Medicare NewsGroup