Medicare backs off on banning insurer lobbying

WASHINGTON — The Obama administration Friday backed away from a ban on insurance company mailings to seniors warning of dire Medicare cuts if health care overhaul legislation is approved.

In a late afternoon memo to health plans, Medicare said insurance companies may lobby seniors, provided they first get permission from beneficiaries, and no federal funds or data are used. Last month, Medicare had ordered a halt to such mailings after a Democratic lawmaker complained about a misleading flyer.

The controversy quickly escalated, with Republicans calling the ban a "gag order" that violated free speech rights. GOP senators threatened to block Obama's health nominees unless Medicare withdrew the ban.

Medicare officials say no gag order was ever issued. They said their directive Friday only clarifies a long-standing policy that protects seniors from nuisance mailings and abusive marketing.

But Republicans claimed a political victory.

"Basically, they are reversing the gag order," said Rep. Dave Camp of Michigan, the ranking Republican on the House Ways and Means Committee. "They had blocked all the plans from communicating with beneficiaries. I think they overstepped their bounds."

In the background are concerns among seniors about using Medicare cuts to finance Obama's health care overhaul plan.

Specifically at issue are benefits for more than 11 million seniors enrolled in private insurance plans through a popular program called Medicare Advantage. Because of a funding formula dating from when Republicans controlled Congress, the plans are paid more than it costs to care for seniors in traditional Medicare. Insurers use the money to provide more comprehensive benefits than regular Medicare.

Obama has called for trimming the extra payments to help pay for providing coverage to uninsured workers and their families. But the insurance industry is determined to block the cuts, which would lead to lower profits for industry, and higher costs and fewer benefits for seniors in private plans. About one-fourth of all Medicare beneficiaries are signed up in private plans, and lawmakers are sensitive to the potential backlash.