Oct. 15 Daily News editorial

The health-care bill voted out of the Senate Finance Committee on Tuesday is just one part of a work in progress. The final product — assuming Congress can eventually agree on one health-care bill — may bear little resemblance to this committee’s bill. That’s probably a good thing, because this piece of legislation is far from ideal.

But there is one part of the Senate panel’s bill that we could support without reservation. It’s a provision secured in the legislation by Washington Democrat Maria Cantwell correcting the regional inequities in the way the government distributes Medicare dollars. The inequities result from a flawed Medicare funding formula that rewards inefficiency, while effectively punishing those regions that have made wise use of their health-care dollars with low hospital and physician reimbursement rates.

For at least a decade, Pacific Northwest congressional delegations have pushed unsuccessfully to correct this distribution formula. The need for that correction now is somewhat urgent. Any cuts in Medicare to help offset the cost of a broader health-care reform would exacerbate the impact to the formula’s regional inequities.

The Pacific Northwest is on the short end of the funding formula. Oregon is particularly hard hit. The state’s Medicare reimbursement rates were near the lowest in the nation in 2006, according to an analysis last summer by The Oregonian. Oregon was 48th among the states, with Medicare reimbursements per patient averaging $6,122. Washington was 35th among the states that year, with reimbursements per patient averaging $7,110. These reimbursements compare to $9,564 per patient in New York, $9,401 in Louisiana and $8,899 in California.

Medicare’s funding formula is based on the historical pattern of health-care costs in each county. Both Oregon and Washington have made efficient use of their medical resources, holding down health-care costs. The two states’ reward? Some of the lowest Medicare reimbursement rates in the country.

It’s difficult to imagine a less sensible or more unfair way of distributing Medicare dollars. But correcting this flawed formula is a difficult proposition, given the political equation. Many heavily populated — and well-represented — states enjoy some of the highest Medicare reimbursement rates. Under any fiscally responsible plan, achieving regional equality would mean adjusting those high rates downward. Lawmakers in such as New York, California and Florida quite naturally prefer the status quo.

But changing this formula is very important here and in many other states where the wise use of health-care resources has resulted in fewer Medicare dollars. Low reimbursement rates make it harder to attract doctors and make doctors less willing to take on more Medicare patients. Low reimbursement rates also put rural hospitals at greater risk of closing. Larger hospitals are forced to charge privately insured patients more to offset low reimbursement rates for Medicare patients, driving up the cost of health insurance.

We’d like to see this funding formula corrected in a stand-alone bill. But we are encouraged to see it addressed in the Senate Finance Committee’s bill. The hope is that Cantwell’s provision will end up in a final health-care bill that we can support.