Private health plans targeted in Medicare bill

By Kim Dixon

WASHINGTON (Reuters) - U.S. health insurers are targeted for billions in cuts in must-pass legislation that lawmakers will begin debating this week, though other health companies may see benefits.

Payments to health insurers such as Aetna Inc (AET.N) and Humana Inc (HUM.N), which contract with the government Medicare program, would be trimmed under competing plans offered by the top Democrat and Republican on the Senate Finance Committee.

A bill sponsored by Montana Sen. Max Baucus, Democratic head of the committee, would cut payments to private plans most, by at least $12 billion. A procedural vote on Thursday will determine its fate.

"It'll be an uphill battle," said David Certner, legislative policy director for seniors' group AARP, which backs that plan.

Iowa Sen. Charles Grassley, the finance panel's top Republican, released a rival plan on Wednesday. His plan also contains cuts to private plans, though they are less heavy.

Lawmakers face a ticking clock to pass a legislative fix by June 30, or doctors who treat Medicare patients will face a nearly 11 percent pay cut -- seen as a highly unlikely outcome in an election year.

Senate Democrats, with some Republicans, want to preserve doctors' payments with money saved from cutting private Medicare plans, known as Medicare Advantage. A recent Medicare Payment Advisory Commission report said private plans are paid 13 percent to 17 percent more than standard Medicare.

"Every Medicare beneficiary in the country ... will pay $2 extra per month to subsidize these extra payment rates," Baucus said on the Senate floor on Wednesday.