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Friday, October 2, 2009

Medicare and Health Care Reform

There has been much contention regarding what effects, if any, health reform would have on medicare beneficiaries. This is a summary of the salient points made by both sides of the debate. The conclusion being: those relying on medicare Advantage will have benefits cut, yet Democrats cannot fund their government-run insurance option without first pushing out the private sector-run Medicare Advantage.

Heritage Foundation - Obamacare Does Cut Your Medicare Benefits

Over one in five Medicare patients are enrolled in the Medicare Advantage plans that President Obama wants to completely cut. The benefits that over 10.5 million seniors would probably lose as a result of President Obama’s $200 billion in Medicare Advantage cuts include:
  • Prescription drug coverage
  • Preventive-care services
  • Coor¬dinated care for chronic conditions
  • Routine physical examinations
  • Additional hospitalization
  • Skilled nursing facility stays
  • Routine eye and hearing examinations
  • Glasses and hearing aids
Congress has been down this road before. After con­gressional cuts in Medicare Plus Choice in 1997, millions of seniors lost access to private health coverage. Heritage fellow Bob Moffit explains:

‘Traditional Medicare routinely covers only 54 percent of the total spending for beneficia­ries’ health care.[10] Without access to Medicare Advantage plans, seniors would have two choices: either settle for the inferior level of coverage of tra­ditional Medicare and go without the additional benefits or buy additional coverage through Medi­gap or some other supplemental coverage option. Meanwhile, the rollback of Medicare Advantage plans would impose a disproportionate burden on the low-income and minority seniors who enroll in them, as well as reduce seniors’ access to Medicare Advantage plans in rural areas.’”

USA Today - Seniors defend Medicare plan Obama calls 'wasteful'

“Medicare Advantage, which has 10.2 million enrollees, comprises about one-fifth of all Medicare participants. Medicare Advantage has its roots in the 1970s but was bolstered in 2003 in hopes that private companies could manage Medicare patients more efficiently. Partly because it often has lower out-of-pocket costs than traditional Medicare, enrollment has nearly doubled over six years, according to a Kaiser Family Foundation report.

Critics, including Obama, say the plans offer lower premiums because insurance companies are subsidized by taxpayers at a rate 14% higher per patient than regular Medicare. Lawmakers initially set a higher reimbursement rate to draw private insurers into the program. The non-partisan Congressional Budget Office says eliminating the disparity would save $150 billion over 10 years… Congress is considering changing the reimbursement formula.”

Wall Street Journal - Medicare For All Isn't The Answer

“Medicare reimbursements to hospitals fail to cover the actual cost of providing services. The Medicare Payment Advisory Commission (MedPAC), an independent congressional advisory agency, says hospitals received only 94.1 cents for every dollar they spent treating Medicare patients in 2007. MedPAC projects that number to decline to 93.1 cents per dollar spent in 2009, for an operating shortfall of 7%. Medicare works because hospitals subsidize the care they provide with revenue received from patients who have commercial insurance. Without that revenue, hospitals could not afford to care for those covered by Medicare. In effect, everyone with insurance is subsidizing the Medicare shortfall, which is growing larger every year.

If hospitals had to rely solely on Medicare reimbursements for operating revenue, as would occur under a single-payer system, many hospitals would be forced to eliminate services, cut investments in advanced medical technology, reduce the number of nurses and other employees, and provide less care for the patients they serve. And with the government in control, Americans eventually will see rationing, the denial of high-priced drugs and sophisticated procedures, and long waits for care.”

Wall Street Journal - Obama Targets Medicare Advantage

“… According to a White House fact sheet titled "Paying for Health Care Reform," (White House Senior Adviser David) Axelrod… notes the administration would cut $622 billion from Medicare and Medicaid, with a big chunk coming from Medicare Advantage, to pay for overhauling health care. Mr. Obama heralded these cuts as "common sense" in his June 13 radio address… Mr. Obama is proposing to cut the program by nearly 20% and thus reduce the amount of money each will have to buy insurance. This will likely force most of them to lose the insurance they have now… There are roughly 23,400 seniors on average in a congressional district who have Medicare Advantage.”

Wall Street Journal - Medicare for Dummies

“Medicare's unfunded liability—the gap between revenues and promised benefits—is currently some $37 trillion over the next 75 years. Yet the President uses this insolvency as an argument to justify the creation of another health-care entitlement, this time for most everyone under age 65… Mr. Obama claimed he can finance universal health care without adding "one dime to the deficit, now or in the future, period," in large part by pumping money out of Medicare. The $880 billion Senate plan he all but blessed this week would cut Medicare by as much as $500 billion, mainly by cutting what Mr. Obama called ‘waste and abuse’…

So no cuts, for anyone—except, that is, for the 24% of senior beneficiaries who are enrolled in the Medicare Advantage program, which Democrats want to slash by $177 billion or more because it is run by private companies. Mr. Obama called that money "unwarranted subsidies in Medicare that go to insurance companies—subsidies that do everything to pad their profits but don't improve the care of seniors. In fact, Advantage does provide better care, which is one reason that enrollment has doubled since 2003."

AP - CBO Chief: Medicare Benefits Could Be Cut

“Congress' chief budget officer is contradicting President Barack Obama's oft-stated claim that seniors wouldn't see their Medicare benefits cut under a health care overhaul. The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators Tuesday that seniors in Medicare's managed care plans would see reduced benefits under a bill in the Finance Committee. The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years. Elmendorf said the changes would reduce the extra benefits that would be made available to beneficiaries. Critics say the plans are overpaid, while supporters say they work well. Obama says cuts to Medicare providers won't reduce seniors' benefits.”

Boston Globe - Democrats seek cuts in Medicare Advantage

More than 10 million seniors enrolled in an enhanced, private version of Medicare known as Medicare Advantage - including 175,000 in Massachusetts - could see their plans shrink or be replaced with traditional coverage under the health care overhaul plans proposed by Democrats in Congress. Democrats want to cut Medicare Advantage by more than $120 billion over 10 years. It could leave seniors with fewer boutique Medicare options offered through private insurance companies or with private plans that offer fewer of the extra benefits such plans provide…

Private insurers can afford to offer extras under Medicare Advantage - such as lower premiums and coverage for eyeglasses and gym memberships - because the federal government pays them about 14 percent more per patient than Medicare typically spends. Many health policy specialists say that, with Medicare nearing bankruptcy and millions of Americans going without any insurance at all, the United States can hardly afford to offer a pricier Medicare version that is growing more popular…

The $120 billion cut to Medicare Advantage is part of spending reductions in Medicare totaling $460 billion to $540 billion over 10 years that have been proposed by Democrats. The cuts would fall on the government reimbursement rates for a broad variety of providers such as hospitals and home health agencies, which could probably absorb them without affecting the services elderly Americans receive, many specialists said in interviews… Most of the rest of the Democrats’ Medicare spending reductions involve asking providers to accept a slower-than-expected rate of growth in payments over the next decade… Some, such as payments to home health care agencies, were previously recommended by the Medicare Payment Assessment Commission…

Some specialists worry seniors could be harmed indirectly. Gail Wilensky, who ran Medicare under President George H.W. Bush, notes that many nursing homes depend on getting overpaid by Medicare to offset the stingy payments states provide for Medicaid patients. Curtailing those overpayments could strain those fragile institutions, she said.”

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