One of the most common Republican narratives about the new health care reform law argued that eliminating the subsidy to private insurers participating in Medicare Advantage would force insurers to stop offering coverage, causing 10 million seniors to lose their Medicare benefits. Throughout the debate, Republicans introduced numerous amendments and motions instructing Congress to remove the $136 billion in cuts to the Medicare Advantage program. Sen. John McCain (R-AZ) even urged seniors to rip up their AARP cards to protest the organization’s support for the bill. But yesterday, the Washington Post’s Amy Goldstein has yet another article pointing out that the GOP’s fear were overstated — “Premiums have not jumped substantially, and benefits have not tended to erode”:

Insurers’ premiums for Medicare customers are, on average, rising by a smaller amount for 2011 than for this year and in 2009, according to Kaiser. And widespread reductions in medical benefits have not occurred, federal health officials said.

“What we are seeing is a very strong commitment to the program” by health plans, said Jonathan Blum, director of the CMS’s Center for Medicare. Blum said that insurance executives with whom he has met have told him they expect to enroll more Medicare patients for the coming year – despite recent predictions by the Congressional Budget Office that enrollment would dip.

Outside the Obama administration, many fear that the smooth experience will not continue for long. “It may be a little early,” said David Certner, legislative director for AARP, the influential lobby for Americans 50 and older, which sells coverage to its eligible members under Medicare Advantage. “A lot of these changes . . . don’t kick in until next time around. We’ll see what the impact is.”

A main reason lies in the federal payments. For 2011, the reimbursements to health plans will be frozen at the same level as this year, meaning that the typical plan will be paid 10 percent more than rates to health-care providers in traditional Medicare in the same community – compared with13 percent higher in 2009.

The law’s deeper financial impact on insurers is scheduled to begin taking effect in 2012. That is when the law starts to ratchet down the increases in payments- by different amounts in different parts of the country – over several years. “It’s not going to be possible to keep current benefit levels and premiums where they are today when these massive cuts go into effect,” predicted Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the industry’s main trade group. Congressional budget analysts predict that 3 million fewer people will be in Medicare Advantage by 2019.

It is, in fact, unclear is how insurers will respond to the cuts in 2012 and what effect the government’s decision to expand the system of bonuses has had on present plan participation.

I’ve neglected this story on the blog — Austin Frakt however, has been covering it very well over at the Incidental Economist. Basically, the health care law awards bonuses to Medicare Advantage plans rated four or five stars for quality (approximately 1 in 6 plans). CMS recently unveiled a 3-year expansion of the bonus payments program to include three-star rated plans (approximately three-quarters of the plans in Medicare). The problem is that expanding the bonus program discourages plans from improving quality and establishes the precedent and expectation of rewarding poor plans. That could cost the government much more than the estimated $1.3 billion 3-year expansion and keep plans in the program for all the wrong reasons.

Earlier today, in a vote of 73 to 25, the Senate approved a Food Safety Bill that would “expand the Food and Drug Administration’s authority over farms and food processors,” but ultimately failed to attach an amendment to repeal the 1099 reporting requirement in the Affordable Care Act. Lawmakers and small business lobbyists generally agree that the provision — which improves tax compliance by requiring small businesses to report any purchases over $600 to the IRS, and raises $19 billion to pay for the law — overburdens businesses with paperwork and proposed numerous amendments to repeal it. The question has always been how to pay for the $19 billion in lost revenue and last night, Sens. Mike Johanns (R-NE) and Max Baucus (D-MT) offered two solutions.

Both measures failed to garner the necessary 67 votes to be attached to the underlining legislation. The two amendments had the effect of splitting the vote for repeal, but a grand total of 53 Democrats still voted to eliminate the provision (voting for one bill or the other). Just five — Carper (D-DE), Dodd (D-CT), Durbin (D-IL), Harkin (D-IA) — voted to preserve the measure (against both measures). Sen. Pryor (D-AR) didn’t vote on the Johanns amendment, and then voted Nay on Baucus’ measure:

JOHANNS AMENDMENT: Repealed the 1099 provision and pays for the measure by directing Office of Management and Budget (OMB) to identify $39 billion in unspent and unobligated accounts. Failed 61 to 35. (21 Democratic voted for the measure. Bayh, Bingaman, Cantwell, Conrad, Feingold, Hagan, Klobuchar, Kohl, Lincoln, Manchin, McCaskill, Menendez, Nelson (FL), Nelson (NE), Stabenow, Tester, Udall (CO), Udall (NM), Warner, Webb all voted in favor the measure)

BAUCUS AMENDMENT: Repealed the 1099 provision without paying for it. Failed 44 to 53. (14 Democrats voted against the measure: Bennet (CO), Bingaman, Carper, Conrad, Dodd, Durbin, Feingold, Harkin, Kohl, Lincoln, McCaskill, Nelson (FL), Udall (CO), Udall (NM) voted against the measure.)

The 1099 measures may have failed — as some Democrats objected to delegating the task of finding cuts to an agency within the executive branch — but the high vote count on the Johanns amendment suggests that the measure could pass under normal rules if it is re-introduced in the new Senate. Johanns spokesperson Natalie Krings tells me that the Senator “was pleased to see 21 of his Democrat colleagues support the amendment” and that he “intends to work with Senator Baucus on repealing the measure.” “As long as the offset is not a tax increase, he is all ears,” she added. “We’ll keep pushing and it is our hope that tonight’s show of support for job creators is another step toward scored obvious needed end result – full repeal.” It’s still unclear, however, if the CBO socred the pay-for as a savings.

The underlining bill would “allow the FDA to set new standards for farms, require processors to have hazard-control plans for preventing contamination of foods, and increase inspections of producers.” The FDA will be able to recall food it suspects is tainted, access to internal records at farms and food production facilities and “set safety standards for imported foods, requiring importers to verify that products grown and processed overseas meet safety standards.” A more robust version passed the House in 2009 and “House leaders have indicated that the House would accept the Senate version, avoiding the need to reconcile the bills.”