Obamacare: Bad for Seniors
Millions Lose Their Current Coverage. The Congressional Budget Office (CBO) estimated that the health care takeover[i] will cut a total of $202.3 billion from Medicare Advantage (MA) plans.[ii] These plans deliver a range of health care options to nearly 11 million seniors,[iii] almost one-quarter of those enrolled in the Medicare program. According to the non-partisan Medicare actuaries, these cuts will “reduce MA rebates to plans and thereby result in less generous benefit packages;” enrollment is also projected to decline at least 33 percent by 2015.[iv]
According to former Clinton Administration official Ken Thorpe, while every senior had access to a Medicare Advantage plan in 2007, millions of seniors did not have a choice of plans in 1999[v]—and the significant cuts mean that the President’s promise of “if you like your current plan, you can keep it” will ring hollow for many Medicare Advantage beneficiaries.
Reduced Access—Or Higher Premiums. In order to keep to the President’s promise of a deficit-neutral bill, the health care takeover excludes language providing adjustments to the Medicare formula that governs physician reimbursement levels. As a result, physicians will receive a 21 percent cut in payment levels beginning in April 2010 and further reductions thereafter. While the President’s budget proposes to address the payment issue, it does not propose to pay for the $371 billion cost for these changes.[vi] As a result, if the President’s proposals become law, seniors would pay one-quarter of the corresponding increase in physician spending through higher Part B premiums—nearly $100 billion worth.
Medicare Part D Premium Increases. The health care takeover would eventually eliminate the Part D coverage gap, or “doughnut hole.” However, CBO has previously stated that filling in the “doughnut hole” immediately would cause a 50 percent spike in average Part D premiums when compared to current law projections.[vii] These higher costs will be passed on to American seniors.
Does Not Address Medicare’s Long-Term Solvency. Although the legislation includes more than $500 billion in Medicare savings provisions, the Administration’s own actuaries have confirmed that the bill will increase overall health spending—exacerbating the long-term trends that have placed the Medicare program in financial peril.[viii] Moreover, the bill contains an unprecedented expansion of the Medicare payroll tax—not to save Medicare, but to fund new entitlements—a measure that the CBO stated “would not enhance the ability of the government to pay for future Medicare benefits.”[ix]
Opens the Door to Government Rationing. The health care takeover establishes a new board of unelected bureaucrats empowered to make binding recommendations on cost reductions within Medicare. Patients may be concerned that the bill could insert bureaucrats between patients and doctors, particularly given President Obama’s comments that there needs to be a “difficult democratic conversation” about what the President views as excessive spending on end-of-life care.[x]
[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.
[ii] Congressional Budget Office analysis of H.R. 4872 in concert with H.R. 3590, March 20, 2010, http://cbo.gov/ftpdocs/113xx/doc11379/Manager%27sAmendmenttoReconciliationProposal.pdf.
[iii] CMS Office of the Actuary, “Brief Summaries of Medicare and Medicaid,” November 2009, http://www.cms.hhs.gov/MedicareProgramRatesStats/downloads/MedicareMedicaidSummaries2009.pdf, p. 7.
[iv] CMS Office of the Actuary, Estimated Financial Effects of H.R. 3590 as passed the Senate, January 8, 2010, http://www.politico.com/static/PPM130_oact_memorandum_on_senate_bill_as_passed_01-08-09.html.
[v] Ken Thorpe and Adam Atherly, “The Impact of Reduced Medicare Advantage Funding on Beneficiaries,” April 2007, http://www.bcbs.com/issues/medicare/background/Medicare-Advantage.pdf.
[vi] President’s Fiscal Year 2011 Budget Submission to Congress, February 2010, http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf, Table S-7, p. 162.
[vii] Congressional Budget Office, Budget Options Volume 1: Health Care, December 2008, http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf, Option 89, pp. 176-77.
[viii] Last year, the Medicare trustees found that the program faces 75-year unfunded liabilities of $37.8 trillion. See report at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2009.pdf.
[ix] Congressional Budget Office, Letter to Honorable Jeff Sessions, January 22, 2010, http://www.cbo.gov/ftpdocs/110xx/doc11005/01-22-HI_Fund.pdf.
[x] David Leonhardt, “After the Great Recession,” New York Times April 28, 2009, http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html.