Obama's Medicare rate setter gets boost, jeers

WASHINGTON (Reuters) - President Barack Obama's idea for an independent agency to decide how much Medicare pays doctors and hospitals won support on Wednesday from conservative Democrats, but others from Obama's own party oppose the plan as they struggle to overhaul U.S. healthcare.

Fiscally conservative Democrats known as "Blue Dogs" backed the concept which would strip much power from lawmakers and give it to an executive agency to set annual payment rates for medical services and products under Medicare, the federal health program for the elderly, a source familiar with the talks said.

Gaining support of his party's fiscal hawks is important for Obama to win his top domestic policy goal, a sweeping reform of the healthcare system.

Their demand that more money be saved in government health programs has stalled progress on the bill in the House of Representatives and won the ear of Obama, who met with some of them at the White House on Tuesday.

But the liberal Democrat who chairs a health subcommittee called the idea of an independent agency "stupid at best, unworkable, childish."

Representative Pete Stark told reporters Obama's plan would strip Congress of authority over the Medicare program, which insured 45 million elderly and disabled at a cost of $483 billion in 2007. He said doctors and hospitals were calling him with complaints as well.

"Every major provider group is calling up saying they will oppose the (healthcare) bill," if it contains the independent agency, Stark said after a closed-door meeting of Democrats on the House Ways and Means Committee.

Currently the Medicare Payment Advisory Commission, created in 1997, advises Congress on Medicare payment policies, but lawmakers are free to ignore it.

Obama wants to remove lawmakers from managing rate setting under Medicare, an idea backed by many mainstream health experts.

"Congress needs to get out of the business of micromanaging provider payments," said David Kendall, a former congressional health staff member who is now an analyst at the Third Way, a think tank that calls itself the moderate wing of the progressive movement.

"We need some expertise to manage these decisions rather than making them all political," Kendall said.

A QUESTION OF AUTHORITY

Obama's budget director Peter Orszag backed two similar proposals last week.

One, proposed in the Senate by Democrat Jay Rockefeller, would turn the existing MedPAC into an independent executive branch agency with power to set policy.

The second, proposed by the Obama administration, would establish an agency called the Independent Medicare Advisory Council that would make recommendations on Medicare payments to the president. Congress would have a month to overturn its recommendations.

Ways and Means Committee Chairman Charles Rangel told reporters after one of their closed-door sessions, "Right now we have shared responsibility (for Medicare) and the only question is what they will be able to do without our consent."

Two House panels passed their parts of landmark health care legislation last week, but the legislation is being held up by the Democrats in the House Energy and Commerce Committee who want to find more savings in healthcare program.

The Senate is working on its own version of health care legislation.

(Additional reporting by Jackie Frank, editing by Vicki Allen)