GAO Study Exposes Bogus Obamacare Savings
Ahead of this afternoon’s release of the official Medicare trustees report, the Administration is out with its own “study” attempting to put a positive spin on Obamacare’s impact on Medicare. The report claims that Obamacare will “save” $200 billion between now and 2016. However, those claims are based on spending reductions that the non-partisan Medicare actuary believes “would become unsustainable and that Congress would likely override or modify them.” If the spending reductions are not overridden, the actuary has stated that 15 percent of hospitals and other providers could become unprofitable by 2019, and up to 40 percent of providers could become unprofitable in the long term.
A Government Accountability Office (GAO) report released today makes this exact point – illustrating how the Obama Administration created an $8 billion Medicare Advantage demonstration program that overrides many of Obamacare’s cuts. GAO found that this massive demonstration project “is at least seven times larger than that of any other Medicare demonstration conducted since 1995 and is greater than the combined budgetary impact of all of those demonstrations.” According to GAO, the demonstration “precludes a credible evaluation of its effectiveness,” and is instead focused on shelling out money to temporarily undo much of Obamacare’s cuts – a whopping 71% of Obamacare’s Medicare Advantage cuts will be undone in 2012, compared to just 32% in 2013 and 16% in 2014. (Can anyone think of a reason why the Obama Administration might want to undo the Medicare Advantage cuts this year…?) For all these reasons, as a New York Post op-ed this morning noted, the demonstration program looks suspiciously like a political attempt by the President to avoid angering seniors by cutting Medicare Advantage while running for re-election.
The GAO report proves how the Administration’s study is fundamentally flawed. The Administration report assumes all the Medicare spending reductions will go into effect, but the GAO report illustrates how the Obama White House has already reversed one of the major spending reductions – the Medicare Advantage cuts – in order to fend off political dissent during the President’s re-election campaign. The Associated Press previously reported on the Medicare Advantage demonstration last year, noting that the program “could head off service cuts that would have been a [political] headache for Obama and Democrats in next year’s elections.” Even a former Democrat staffer who worked in the Clinton Administration admitted that the effort amounted to a political stunt: “It’s fair to say that [Medicare] could not tolerate dislocation, given the political climate.”
While Obamacare’s spending reductions are subject to alteration for political purposes, the new spending on the law’s massive new entitlements are sacrosanct, and virtually guaranteed to take effect if President Obama remains in office. Of course, undermining the spending reductions while keeping the new spending would make the entire law, and Medicare itself, even more fiscally unsustainable than the status quo. That’s why, when it comes to today’s dueling reports, don’t believe what the Administration says in its spin-laden study – look at what it already did to undermine politically unpalatable spending reductions.