2018-01-11 18:20:46 UTC
Obama's defense of his $716 billion in cuts to the Medicare
program just doesn't hold up:
"Fact-Checking the Obama Campaign's Defense of its $716
Billion Cut to Medicare
Avik Roy, Forbes Staff, AUG 16, 2012 @ 01:46 AM
. . .
Defense #2. Obamacares Medicare cuts dont harm seniors
Mitt Romneys Medicare ad is dishonest and hypocritical,
claims Obama campaign spokeswoman Lis Smith. The savings
his ad attacks do not cut a single guaranteed Medicare
This is a deeply misleading statement by the campaign. Its
true that the Obamacare Medicare cuts dont make any changes
to the Medicare insurance benefit, which means that the
health-care services covered by the Medicare insurance plan
are technically unchanged. But Obamacares Medicare cuts are
bluntly structured, in ways that will harm seniors access
Of the $716 billion in cuts, $415 billion come in the form
of updates to fee-for-service payment rates, a euphemism
for reducing Medicares payments to doctors and hospitals.
But what happens when you reduce payments to doctors?
Doctors stop being willing to see Medicare patients. And if
you cant actually get a doctors appointment, what does it
really matter what your insurance plan covers on paper?
We already see this happening in the Medicaid program, where
sick and injured children cant get appointments to deal
with urgent medical conditions, because Medicaid so severely
underpays doctors relative to private insurers. By the end
of this decade, under Obamacare, Medicare reimbursement
rates are set to fall below those of Medicaid.
The Obama administration's own Medicare actuary, Richard
Foster, has explained that the Obamacare Medicare cuts could
make unprofitable 15 percent of hospitals serving Medicare
patients. "It is doubtful that many [hospitals and other
health care providers] will be able to improve their own
productivity to the degree" necessary to accommodate the
cuts, Foster has written. "Thus, providers for whom Medicare
constitutes a substantial portion of their business could
find it difficult to remain profitable, and, absent
legislative intervention, might end their participation in
the program (possibly jeopardizing care for beneficiaries.
[Our] simulations...suggest that roughly 15 percent of
[hospitalization] providers would become unprofitable within
the 10-year projection as a result of the [spending cuts]."
Sarah Kliff cited a study yesterday that showed that every
$1,000 that a hospital lost in Medicare reimbursements was
associated with a 6-8 percent increase in mortality rates
from heart attacks. John Goodman pointed out in the Wall
Street Journal that Obamacares coverage expansion will not
be accompanied by an increase in the supply of doctors,
which will lead doctors to focus their time on the
privately-insured patients who pay them the best.
APOTHEFACT CONCLUSION: Seniors benefits wont change on
paper. But they will change in reality, because fewer and
fewer doctors will accept their insurance.
Defense #3. Obamacare cuts wasteful spending from the
Medicare Advantage program
Of the $716 billion in Medicare cuts, the next biggest
chunk, $156 billion, is taken out of the market-oriented
Medicare Advantage program, known to wonks as Medicare Part
C. Nationwide, 24 percent of all seniors are enrolled in
Medicare Advantage, though that percentage is meaningfully
higher in important swing states like Florida (32 percent)
and Ohio (34 percent).
The rationale for cutting Medicare Advantages rates is
that, prior to Obamacare, the government paid $1.14 per
retiree in an MA plan, vs. $1.00 per retiree in a
traditional plan. President Obama has called these
differences unwarranted subsidies [that] pad [private
insurers] profits but dont improve the care of seniors.
But the comparison between MA and government-run plans cant
be made on price alone. Due to the constraints placed on MA
plans, those plans are incentivized by Congress to offer
more benefits at the expense of lower prices. Imagine if you
were searching airfares from New York to London, but
couldnt shop on price, only on what the planes served for
food, and what movies were on board.
However, on an apples-to-apples basis, if you take out the
extra benefits, Medicare Advantage plans are 9 percent
cheaper than government-run plans. That was the finding of
three Harvard economists, published in the Journal of the
American Medical Association this month.
So, how will Obamacares Medicare Advantage cuts affect
seniors who are currently enrolled in MA plans? My
co-blogger, Robert Book, published a 2010 paper on this
subject, along with Jim Capretta. Robert and Jim found that
Medicare beneficiaries who would have enrolled in the
Medicare Advantage program under prior law will lose an
average of $3,714 in 2017 health care services. You can see
a state-by-state distribution of the effects on the map
Personally, I have no problem with eliminating the extra
subsidy for Medicare Advantage plans. But that elimination
should have been accompanied by regulatory changes, so that
Medicare Advantage plans could compete on price with
traditional government-run Medicare. That would have saved
the government even more money, instead of forcing seniors
out of the program.
APOTHEFACT CONCLUSION: Medicare Advantage offers seniors
higher-quality care at a lower cost than government-run
Medicare. Obamacare should have sought to save money by
expanding the program, instead of undermining it. . . .
UPDATE 2: As a matter of clarity, I should point out that
Medicare reimbursement rates were already set to eventually
fall below Medicaid's under the Sustainable Growth Rate
schedule instituted with the Balanced Budget Act of 1997.
Obamacare significantly worsens and accelerates this problem
with its additional cuts. More details here and here. . . .
I write further on the impact of Obamacare's cuts to
reimbursement rates to doctors and hospitals in a new piece