The Facts About H.R. 1 and Medicare Advantage
Last evening, HHS Secretary Sebelius released a letter to Chairman Baucus regarding H.R. 1, the House-passed continuing resolution. The letter makes several claims alleging that, should the de-funding provisions in H.R. 1 be enacted into law, seniors will lose access to Medicare Advantage plans and other services. The quick and dirty summary: The scenarios the Secretary envisions are NOT allowed under Congressional rules, are NOT assumed by the Congressional Budget Office, and can be prevented by HHS regardless, unless the Administration wishes to withhold Medicare program benefits to score political points. Here are the details:
- First and foremost, procedural concerns mean you can’t authorize changes to mandatory programs like Medicare in a discretionary appropriations bill.
- For this reason, the Congressional Budget Office (CBO) DOES NOT ASSUME ANY of the Secretary’s scenarios will happen. The CBO’s list of changes to mandatory programs in H.R. 1 contains ZERO changes to mandatory spending programs within the Centers for Medicare and Medicaid Services (CMS) that would occur if the House-passed CR were enacted. Simply put, CBO said that H.R. 1 will make ZERO changes to spending on Medicare benefits, contrary to the Secretary’s statements that HHS may need to shut down the Medicare Advantage program if the bill is enacted.
- Section 402(a) of the Social Security Act – 42 U.S.C. 1395b-1 – provides the Secretary with broad authority “to develop and engage in experiments and demonstration projects…to determine whether, and if so which, changes in methods of payment or reimbursement…would have the effect of increasing the efficiency and economy of health services…through the creation of additional incentives to these ends.” HHS Secretaries of both parties have used this demonstration authority numerous times over the past several decades; in fact, the Obama Administration just used its demonstration authority to increase MA plan payments by $7.2 billion. In other words, HHS has all the legal authority it needs to keep the MA program (and the rest of Medicare, for that matter) up and running – unless it wants to score political points by taking benefits away from seniors.
- It’s worth pointing out that in September 2009, President Obama alleged to George Stephanopoulos (transcript excerpts below my signature) that “ordinary Medicare does just as good, if not better, at keeping people healthy” when compared to Medicare Advantage. The President made such claims in the context of complaints that the health care law’s $200 billion in Medicare Advantage cuts would cause some seniors to lose their current plan – and the President indicated that seniors losing their MA coverage would be a good thing. For the Administration to come back and now express concern that H.R. 1 would cause seniors to lose their Medicare Advantage coverage is disingenuous in the extreme.
- The language of the de-funding amendments was considered by the House on February 18 – nearly three weeks ago – and the text of the amendments were available prior to that date. Yet the Secretary’s letter mysteriously appeared (and was leaked to the press) about an hour after the Senate reached unanimous consent to take up H.R. 1 and Senate Democrats’ CR alternative – suggesting this response is a political stunt.
Senator Reid commented earlier this week that “the time for politics is over” with regards to the continuing resolution. Given the questionable claims and suspicious timing of Secretary Sebelius’ letter, perhaps he should tell the Administration to heed his own advice.
STEPHANOPOULOS: Let’s go to Medicare then…
OBAMA: Good.
STEPHANOPOULOS: …because you also said that no one will lose what they have. And Senator Bill Nelson, a Democrat, says that the cuts you’re looking at in Medi — the Medicare Advantage program…
OBAMA: Right.
STEPHANOPOULOS: …are going to force people to lose coverage they now have.
OBAMA: No. Here — here’s what’s going to happen. These are essentially private HMOs who are getting, on average — and this is not my estimate, this is Democrats and Republicans, experts have said — they’re getting, on average, about 14 percent more over payments, basically subsidies from taxpayers for a program that ordinary Medicare does just as good, if not better, at keeping people healthy.
Now, they package these things in ways that, in some cases, may make it more convenient for some consumers, but they’re overcharging massively for it. There’s no competitive bidding under the process.
And so what we’ve said is instead of spending $17 billion, $18 billion a year, $177 billion over 10 years on that, why wouldn’t we use that to close the donut hole so the people are actually getting better prescription drugs…
STEPHANOPOULOS: But Senator Nelson says it’s going to…
OBAMA: …Why don’t we make sure that we’re using some of that money to actually make people healthier?
STEPHANOPOULOS: But he said it’s going to cause beneficiaries right now to lose what they have.
OBAMA: Look, I understand that change is hard. If what you’re saying is that people who are currently signed up for Medicare advantage are going to have Medicare and the same level of benefits, but they may not be having their insurer get a 14 percent premium, that’s absolutely true and will the insurers squawk? You bet.
STEPHANOPOULOS: They may drop the coverage.
OBAMA: No, these folks are going to be able to get Medicare that is just as good, provides the same benefits, but we’re not subsidizing them for $18 billion a year.
STEPHANOPOULOS: So Senator Nelson, he wants to pass an amendment that shields anyone currently on Medicare advantage from any cuts. Do you support that?
OBAMA: George, I’m not going to be negotiating a particular provision of the bill, sitting (ph) down with you here right now. What I am going to say is this: the basic principle that is indisputable is that we are wasting hundreds of billions of dollars in Medicare that is not making people healthier. I want to make sure that we’re using that money to actually make people healthier.
STEPHANOPOULOS: But if people lose their Medicare advantage?
OBAMA: What I have said is we’re not going to take a dollar out of the Medicare trust fund. We’re going to make sure that benefits are just as strong if not stronger. We’re not going to subsidize insurance companies in ways that end up creating a situation that Medicare is actually weaker and has a less financial foundation, because right now, we’ve got eight years from now potentially Medicare going into the red.