MediScare: No, “ObamaCare” Doesn’t Cut Medicare (Updated)

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MediScare: No, “ObamaCare” Doesn’t Cut Medicare (Updated)

by David Pinar on Aug. 15, 2012, under Pol. & Govt.

I’m sorry, but do Republican politicians have no shame? They’ve been running with the bold faced lie that “ObamaCare”, aka the Affordable Care Act, “cuts Medicare” since the day it was signed into law. Jesse Kelly pasted signs that “Gabby voted to cut $500 Billion Medicare” on his campaign signs in 2010. What do you do when a lie doesn’t stick? Tell a bigger lie. Now that Mitt Romney has selected Paul Ryan as his running mate Ryan’s “Path to Prosperity” Budget Plan that converts Medicare into a voucher system that will result in much high medical cost for future retires has become a campaign issue. So Romney figures the best defense is a good offense and has dusted off the old “Obamacare cuts Medicare” lie and upped the ante – now he claims the Affordable Care Act “cuts Medicare” by an absurd $700 Billion.

Whatever amount you want to use, the Affordable Care Act doesn’t “cut Medicare” – it saves Medicare by reducing expenses. Let SeniorCorps.org explain:

Despite the doom and gloom tactics of some members of congress and talking heads, the cuts will come from two prime sources; (1) eliminating Medicare fraud, and (2) a reduction in the amount of payments that are paid into Medicare Advantage programs that are offered by private insurance companies.

Medicare fraud cost the program an estimated $60 Billion every year. By beefing up the enforcement of fraud detection, the Affordable Care Act enables the Medicare Administration to significantly reduce this waste. As for Medicare Advantage program, that was a program passed by a Republican Congress under the theory that private business can always do something better than government. Enron anyone? Medicare Advantage benefits typically cost much more than benefits directly from Medicare. As my blogging colleague Denise in her Medicare and More blog explains so well in her Paul Ryan’s Medicare Plan article today, Medicare administrative costs average 3-4%, while private insurance companies’ administrative costs average around 15%. One reason is that the Medicare Administration doesn’t pay hundreds of millions in salaries & benefits to CEOs like the big insurance companies do. And private insurance companies don’t like to lose money, so they got the Republicans to include a “risk adjustment” factor into the Medicare Advantage program that guarantees the insurance companies will always get paid more than their actual cost. It doesn’t matter if their higher costs are from bloated administrative costs or actual benefits paid out to enrollees, they always get paid more. The Affordable Care Act remedies that by reducing and capping payments to insurance companies offering Medicare Advantage policies. The leaner, more efficient companies will do just fine and continue to offer policies, while the companies with bloated costs will abandon the market. Capitalism at its finest. And seniors don’t lose a single benefit – if they don’t fine find a Medicare Advantage policy that meets their needs they simply re-enroll to get those benefits directly from Medicare.

Another big “cuts Medicare” lie about the Affordable Care Act is that it makes drastic cuts in payments to doctors, hospitals and other healthcare providers. Nope, that’s a law passed by the Republican Congress and signed by President Clinton in 1997. It went into effect in 2002, but so far Congress has constantly voted to defer those payment reductions. If there are any reductions in payments to healthcare providers, it will be from an Act of Congress, not the Affordable Care Act.

No, the Affordable Care Act (“ObamaCare”, if you must) doesn’t cut Medicare – it saves Medicare expenses by eliminating fraud and billions in payments to inefficient insurance companies. But “RyanCare” clearly does – it raises the age for eligibility to age 67, and converts Medicare to a government subsidy to private insurance companies. And if the fixed voucher payments to insurance companies doesn’t cover the cost of private insurance, future retirees will be faced with making up the difference out of their own pocket, or do without.

UPDATE: Thanks to a link in a comment from my fellow Tucson Citizen blogger Fort Buckley, I’m updating my blog with some excellent information from a blog at the WashingtonPost.com by Sarah Kliff:

On July 24, the Congressional Budget Office sent a letter to House Speaker John Boehner, detailing the budget impact of repealing the Affordable Care Act. If Congress overturned the law, “spending for Medicare would increase by an estimated $716 billion over that 2013–2022 period.” As to how the Affordable Care Act actually gets to $716 billion in Medicare savings, that’s a bit more complicated. The majority of the cuts, as you can see in this chart below, come from reductions in how much Medicare reimburses hospitals and private health insurance companies.

I can’t include the chart in my blog as it’s copyrighted material. You can see it at the link to Sarah Kliff’s article, or I’ll explain it: It’ s pie chart showing that 34.8% of the $716 Billion in Medicare savings over the next 10 years comes from reduced reimbursements to hospitals. The hospital companies agreed to it as they expect to have many more paying customers (as opposed to the uninsured) from the Affordable Care Act’s expansion of medical insurance coverage. About 30.2% of savings comes from reduced payments to insurance companies in the Medicare Advantage program. Ms. Kliff explains how that works:

Medicare Advantage plans allows seniors to join a private health insurance, with the federal government footing the bill. The whole idea of Medicare Advantage was to drive down the cost of health insurance for the elderly as private insurance companies competing for seniors’ business.

That’s not what happened. By 2010, the average Medicare Advantage per-patient cost was 117 percent of regular fee-for-service. The Affordable Care Act gives those private plans a haircut and tethers reimbursement levels to the quality of care administered, and patient satisfaction.

Reducing the government subsidy to insurance companies to provide benefits that cost more than if Medicare itself provided them, and ties reimbursement rates to the quality of care provided and patient satisfaction. Sounds like a darn good thing to me. Finally, around 35% of Medicare savings come from a number of small changes. Reductions to Medicare’s Disproportionate Share Payments — extra funds made to hospitals for services made to uninsured patients. Lower payments to home health providers make up another 8.8 percent. About a dozen cuts like this make up the 35% in savings. Ms. Kliff concludes with this point:

It’s worth noting that there’s one area these cuts don’t touch: Medicare benefits. The Affordable Care Act rolls back payment rates for hospitals and insurers. It does not, however, change the basket of benefits that patients have access to. And, as Ezra pointed out earlier today, the Ryan budget would keep these cuts in place.

The bold emphasis is mine. The Affordable Care Act, “ObamaCare” if you must, doesn’t cut back on any benefits for Medicare. It saves over $716 Billion in Medicare expenses over the next 10 years. Repealing it – which Mitt Romney and pretty much anyone with an “R” after their name has vowed to do – would add over $716 Billion to the deficit.

Thanks, Ft. Buckley, for helping me make my point.

This entry was posted on Wednesday, August 15th, 2012 at 11:44 am and is filed under Pol. & Govt.. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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http://www.facebook.com/people/Russell-DeMello/100002300456616 Russell DeMello

Romney’s got it backwards. Firstly, the $716 billion is a savings, not a cut. Healthcare providers will charge Medicare less. That’s a Medicare savings. Providers reduced fees to Medicare in exchange for Obamacare bringing 10s of millions of new patient-customers to providers. Obamacare buys healthcare (from healthcare providers) for lots of new people. Healthcare is a product & Obamacare’s procurement of product (healthcare) for so many new patient-customers is large quantity buying from healthcare providers Large quantity buying saves money by reducing prices in any purchase. In this case, some of the savings went into Medicare. The Medicare savings were used to create new benefits for Medicare patients and extend the solvency of medicare. Without Obamacare bringing millions of new patient-customers to providers the providers wouldn’t have reduced Medicare fees. Obamacare produced value which went FROM Obamacare INTO medicare.

Think in terms of Costco. Think of it as though Costco sold healthcare. Think of it like this: President Obama went to Costco and bought healthcare for 10s of millions of new patient-customers and President Obama called that purchase Obamacare. Because President Obama bought in large quantity/bulk at Costco he got a reduced price. Now instead of calling healthcare by the name healthcare let’s call each new patient getting healthcare a “unit.” Obamacare brings about 30 million new patients to the healthcare industry so that is 30 million new units that Obamacare procured. When you buy anything in that large of a quantity you get a discount which is a savings. President Obama transferred some of the savings generated by procuring all of those units (30 million new patient accounts) from the healthcare providers. President Obama brought the healthcare providers a lot of new patients so the healthcare providers gave something back. They reduced their costs. President Obama could have put all of the savings into Obamacare but instead he put some of the savings into Medicare. Obamacare procured healthcare in such large numbers (quantity) that it got the sellers (healthcare providers) to reduce prices and which means a savings. President Obama transferred some of those savings from Obamacare over to Medicare even though it was Obamacare that generated the savings in the 1st place by procuring all of those new patient accounts (units) in the first place. Value got transferred from Obamacare to Medicare. The savings that Medicare got could only be done if Obamacare exists too.

Yes, Ryan’s budget has the same savings ($716 billion) as Obamacare brought to Medicare and yes Ryan’s budget does this without having Obamacare but the healthcare providers are agreeable to the Obamacare plan reducing Medicare fees whereas the healthcare providers have not chimed in how they feel about Ryan’s $716 billion savings without bringing in all those new patients that Obamacare brings in. The healthcare providers agreed to giving those Medicare reductions since Obamacare was giving them all thiose new patients but the healthcare providers may not like the idea of giving those same Medicare savings if they do not get all the new patients that they get from Obamacare so Ryan’s plan for the $716 billion may not be acceptable to providers.
BajaDemocrats

The AP does a little fact check on Mitt Romney’s claim that Obama “cut” $716 Billion from Medicare:
http://www.politico.com/blogs/burns-haberman/?hp=bh

“GOP presidential candidate Mitt Romney’s new promise to restore the
Medicare cuts made by President Barack Obama’s health care overhaul law
could backfire if he’s elected.

The reason: Obama’s cuts also extended the life of Medicare’s giant
trust fund, and by repealing them Romney would move the insolvency date
of the program closer, toward the end of what would be his first term in
office.

Instead of running out of money in 2024, Medicare says its trust
fund for inpatient care would go broke in 2016 without the cuts. That
could leave a President Romney little political breathing room to
finalize his own Medicare plan.
Obama’s cuts were not directly aimed at Medicare’s 48 million
beneficiaries; instead they affect hospitals, insurers, nursing homes,
drug companies and other service providers. Simply undoing the cuts
would restore higher payments to those service providers. And that would
cause Medicare to spend money faster.

“If you are going to restore (Obama’s cuts), then what it’s going to
do is complicate the financial condition of Medicare,” said former U.S.
Comptroller General David Walker, a fiscal conservative.
http://www.thehoustonconservative.com/ Will Malven

Hey, David, You do know that your reference to “the Ryan Plan” is false and misleading, don’t you? It’s called the Ryan/WYDEN plan–recognize that second name?

Here’s what Ron Wyden–very liberal Democrat member of Congress had to say back before Ryan became an election issue:

“Sitting next to Ryan at the Bipartisan
Policy Center event, Wyden said, ‘There’s a window of opportunity here,
a chance to change the conversation, lower the decibel level … and see
if we can bring together progressives and conservatives” to create a
system in which people on Medicare choose a private-sector health plan
or traditional Medicare, if they want.
Wyden said their plan was “a model driven by choices and competition,
here with traditional Medicare, and approaches that would come from the
private sector, innovation that the private sector offers. We believe
it’s going to work … .’
He added later at that event that their plan “makes some of the old discussion potentially irrelevant.’” [from the very liberal blog FireDogLake. http://news.firedoglake.com/2012/08/15/ron-wydens-dilemma-in-disavowing-ryanwyden/
Second, you are aware, aren’t you, that Ryan’s plan was voted down and is now a dead issue. Ryan is running on Mitt Romney’s plan–which DOES NOT INCLUDE that $700+ Billion that Obama steals from Medicare and all those helpless old people he’s now throwing under the bus.

LOL!!! Between Wyden’s praise, Erskine Bowles’ praise, and Obama’s own agreement that he cuts $700+ Billion from Medicare to fund “Obamacare,” you Dems are gonna have to do some real fancy footwork–of course you’ve always been real good a lying in the Democrat Party..

BajaDemocrats

No, I don’t know that. What Sen. Wyden says: Sen. Wyden: “Romney’s plan hurts the ‘poorest and most vulnerable seniors”:
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/14/sen-wyden-romneys-plan-hurts-the-poorest-and-most-vulnerable-seniors/

- Ezra Klein: Governor Romney says his approach to Medicare reform is bipartisan because you’ve endorsed it. You say that’s wrong. So what, specifically, is the difference between your approaches?

Ron Wyden: My view is that the policies that were adopted by the Republican House majority and the Romney campaign do not preserve the Medicare guarantee. And that’s what the [Ryan/Wyden] white paper was all about. It was a set of options for improving on the existing Medicare system with public and private choices, beefing up consumer protection, adopting a new way to control costs and put Medicare on a budget so you can protect the guarantee.

Probably the two most significant specific differences between what Governor Romney is talking about and the white paper is, first, that the Romney campaign and the governor would repeal the Affordable Care Act. To lay a foundation for putting together a program to protect the guarantee and protect the budget, you need the changes the Affordable Care Act makes to Medicare, like bundled payments and moving the system towards pay-for-quality. Without it, you can’t move to premium support.

http://www.thehoustonconservative.com/ Will Malven

Wow! More dishonesty from the left, how novel . . .

Now Democrats are going to hide behind the oldest lie in budgeting, the old “waste, fraud, and abuse” scam. Go on Mr. Pindar, pull the other one.

Fact: “Obamacare” cuts $716 Billion from Medicare–right off the top (I have heard figures as high as $770 Billion). Even Obama agrees with this, in fact he said in an interview with Jake Tapper November 9, 2009.

Here’s a link: http://abcnews.go.com/blogs/politics/2012/08/president-obama-in-2009-pledged-to-veto-attempts-to-undo-medicare-cuts/

He very clearly says he will defend the cuts made to Medicare:

“TAPPER: One of the concerns about health care and how you pay for it — one third of the funding comes from cuts to Medicare.

PRESIDENT BARACK OBAMA: “Right.”

Want more?

TAPPER: Are you willing to pledge that whatever cuts in
Medicare are being made to fund health insurance, one third of it, that
you will veto anything that tries to undo that?

OBAMA: Yes. I actually have said that it is important for us to make
sure this thing is deficit neutral, without tricks. I said I wouldn’t
sign a bill that didn’t meet that criteria.

You can rationalize and attempt to explain away all you wish, but I think we can pretty definitely say that they are “cuts to Medicare” and they amount to about 3/4 of a trillion dollars–from an already “upside-down” Medicare system.

Now, let’s add the fact that “Obamacare” not only takes 3/4 trillion out of Medicare, but it then double counts that money to force the numbers on “Obamacare” to balance.

BTW: You are aware that the CBO has since revised its numbers and determined that “Obamacare will spend more, tax more and reduce the deficit less.” [from Forbes http://www.forbes.com/sites/aroy/2012/07/27/cbo-obamacare-will-spend-more-tax-more-and-reduce-the-deficit-less-than-we-previously-thought/

from the article: “In 2010, the CBO estimated that Obamacare’s spending on new programs would amount to $929 billion from 2013-2019, and a ten-year cost of $944 billion. Those figures increased to $956 billion and $1,442 billion respectively in 2011, and $1,053 billion and $1,856 billion in 2012.”

LOL!!! At the rate that it is increasing in their calculations, by the time those 10 years are up the total cost to the economy will be over $5Trillion (~$500 billion increase in estimate every year X 10 years = 5 trillion).

“. . . waste, fraud, and abuse . . .

“Please, David, spin us another fantasy yarn–they’re really entertaining.

BajaDemocrats

“BTW: You are aware that the CBO has since revised its numbers?”

- Why yes, I am. Because of the Supreme Court ruling that states can’t be forced to accept increases in Medicaid, GOP Governors are playing politics and denying the expansion of medical coverage to their citizens, so medical coverage won’t be increased as much as planned the Affordable Care Act won’t cost as much as expected – at the expense of doctors & hospitals who must treat uninsured patients.

hgolfer2425

They took 700billion from medicare to help pay for Obamacare—–even Obama admitted it
http://www.facebook.com/annette.aurrecoechea Annette A. Aurrecoechea

I appreciate your input on this subject. I confess ignorance of this thing called “Medicare Advantage”. We’re on Medicare; we have a supplemental policy thru our retirement Blue Cross/Blue Shield and we end up paying just 10%. Where does Medicare Advantage come in? The Time article I’m reading says, “if you have the Medicare Advantage Plan, a private insurance policy UNDER THE AUSPICES OF MEDICARE, any EXTRA BENEFITS you receive beyong the traditional Medicare coverage may eventually be CUT?/ How would that hurt us? And/Or, how much would it affect the guy who does have the “Med.. Advan”? Will appreciate further discussion. I support Obama and I believe this plann is a good one. I just can’t figure out how so many smat people are pushing back onn it?? We are 76 & 86.

BajaDemocrats

Thanks for your post and question, Annette. I would point you to Denise Early’s blog here “Medicare and More”.
http://tucsoncitizen.com/medicare/
Denise is an insurance broker and is much more knowledgeable than I on Medicare issues, I’m several years away from Medicare coverage. I believe you just sign up for a Medicare Advantage plan and the insurance company acts like an HMO and provides the medical services. You may have less out of pocket expenses, but you have to get services from their list of providers. And it can be risky – I had a friend from Hawaii visit me a couple years ago. He became very ill and I ended up taking him to the hospital in Willcox. He had a severe lung infection and they took him by helicopter to TMC and he was on a respirator for 10 days, mostly unconscious. They asked me about his insurance and I told them I thought he was on Medicare, and found a Medicare card in his wallet and gave it to them. Well, it turned out he had signed over his Medicare benefits to the Kaiser Medical Insurance Medicare Advantage plan. They denied all coverage, claiming he was “out of network” and he had to have called them and gotten pre-approval for any service. I told them he was unconscious and on a respirator, how was he supposed to call them? “Doesn’t matter” they told me. He fought with them for a long time and then he died, so I don’t know how it worked out. But when I’m ready for Medicare, I’ll take the service directly from them, not some insurance company.

toughteri

Sorry, David, you’re lying or confused about cuts into Medicare as a result of enacting Obamacare.

A Congressional Budget Report, 7/24/12, states that Obamacare WILL cut into Medicare to the tune of over $700 BILLION!

BajaDemocrats

The non-partisan Congressional Budget Office says the cost of Medicare will be reduced by over $700 Billion over the next 10 years, thanks to the Affordable Care Act. Reduced spending, from savings through reducing fraud and savings on payments to insurance companies in the Medicare Advantage program. Reduced spending vs. “cuts” may seem like only an argument over semantics, but “cut” implies money yanked out of the system, so benefits have to be reduced. No, benefits stay the same, they just cost less through a more effective and efficient Medicare Administration.

BTW, the CBO estimate was Medicare will cost over $700 Billion less over the next 10 years. Contrast that with Romney’s ridiculous claim made the other day in Ohio: ““When he ran for office, he said he’d protect Medicare, but did you know that he [Obama] has taken $716 billion out of the Medicare trust fund?” Mr. Romney said in Beallsville, Ohio. “He’s raided that trust fund.”
- Romney is either a complete liar or doesn’t know what he’s talking about, probably both. No, Obama hasn’t taken a penny from the Medicare Trust Fund – there will be $700 Billion more in it in 10 years.

fortbuckley

So, David, you’re counting on “a more effective and efficient Medicare Administration”? On what planet?
fortbuckley

The Washington Post agrees with Romney’s “ridiculous” claim.

“Romney’s Right: Obamacare cuts Medicare by $716 billion—here’s how.”

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/14/romneys-right-obamacare-cuts-medicare-by-716-billion-heres-how/

BajaDemocrats

First of all, the Washington Post isn’t agreeing or disagreeing with anyone – that’s a blog, much like the blogs here at TC.com. Just as my or your blog doesn’t reflect the opinion of Tucson Citizen, Ezra Klein’s “Wonkblog” doesn’t reflect the opinion of the Washington Post. But, it is an excellent article and does a better job of explaining the savings to Medicare than I did. Thanks for the link, I’m updating my blog with some of the author’s points.

BTW, the blog author doesn’t agree with Romney’s ridiculous claim that Obama raided the Medicare Trust Fund.

fortbuckley

My pleasure, David. Please check out Jay Cost’s comment below that Democrats are counting Medicare savings twice and using Medicare funds to fund Obamacare.

I’m not surprised that you’ve convinced yourself that I’m helping you make your point.

Thanks also for going on record with the following phrase: “The Affordable Care Act saves over $716 billion in Medicare expenses without reducing a single benefit.” Got it, David—NO reductions to a “single benefit” under Obamacare.

Readers, please follow the link I posted to Jay Cost’s article. That article has some quotes from Medicare’s chief actuary, about what’s really going to happen to Medicare.

fortbuckley

If the federal government cuts payment rates to healthcare providers, you really think that the “basket of benefits” for Medicare patients won’t change? The healthcare providers will simply absorb the cost? Ok…

fortbuckley

Oh, I missed this—-the Affordable Care Act cuts expenses by “eliminating fraud.” Wow! No losses due to fraud, AT ALL! Does Obamacare lower our cholesterol, too?

fortbuckley

David, point taken that the Washington Post per se didn’t write that headline. But, Washington Post staffers did. You don’t think the Washington Post has capable staff?

http://twitter.com/ScottTravers Scott Travers

To be clear: The Washington Post does NOT agree with Romney’s claims. The article you cite agrees with Obama’s claims. The phrase “Romney’s right” is offered ironically. Read the article.

toughteri

Now I know that you were intent on misleading. No confusion here.

BajaDemocrats

Did you read the update with the blog from the Washing Post, from the link Fort Buckley graciously provided me? The Affordable Care Act saves over $716 Billion in Medicare expenses without reducing a single benefit, Repealing the ACA would add $716 Billion to the deficit. No misleading here – there’s a big difference between “cutting” and reducing benefits and keeping the same benefits with less expense.

fortbuckley

toughteri, I’m starting to believe that David really believes that Medicare benefits will remain unchanged under Obamacare. So, no, he didn’t deliberately try to mislead you. He really believes it.

toughteri

He’s a fool.

fortbuckley

Jay Cost at the Weekly Standard must have known that you were going to post on Mediscare today:

“Democrats have substantial vulnerabilities of their own on this issue.

Rather than instituting free market reforms, the
Democrats are applying governmental infrastructures like the Independent
Payment Advisory Board (IPAB). This, they hope, will tame the runaway
cost of Medicare, but it also will ruin traditional Medicare for future
recipients as well. The program will be fundamentally different in the
future than it is today, thanks to the IPAB, which will be unelected and
largely free to act without interference from Congress. If the GOP is
vulnerable on premium supports, Democrats are at least as vulnerable on
the IPAB.”

“But it gets worse for LBJ’s party, which two years
ago altered Medicare in ways that would have made the ornery old Texan
spit nickels. Obamacare mandated hundreds of billions of dollars be cut
from the Medicare program, which creates two, enormous political
vulnerabilities for Democrats.”

“First, some of the cuts are likely to undermine the availability of care.”

“Second, Obamacare draws these efficiencies from Medicare not to extend
the program’s solvency, but to fund a brand new entitlement. A shallow
read of governmental reports obscures this fact because of quirks in
the way federal bean counters must account for the HI Trust Fund: the
Democrats were allowed to count the Medicare savings twice, as offsets
to Obamacare spending and extensions to the life of the HI Trust Fund.
In the mixed-up world of Beltway accounting, you can do this; in the
real world, you (obviously) cannot.”

There’s lots more: http://www.weeklystandard.com/blogs/morning-jay-democrats-should-brace-mediscare_649975.html?page=2

Denise_Early

The risk Democrats run in the Medicare debate is that Republican lies might win out over the facts. The facts are that the Affordable Care Act “saves” Medicare $500 billion over many years by reducing payments to Medicare Advantage and through payment changes for hospitals – something hospitals agreed to. And then there is the effort to stop or slow down Medicare fraud.

The Ryan plan actually assumes these same savings in its budget and Republicans voted for the Ryan plan in the House of Representatives. So expect to see both sides shouting about the other party “cutting Medicare”. Of course, the Democrats can say Republicans will end Medicare as we know it – and that won’t be a lie. So we’ll see which slogan wins out.

fortbuckley

Yes, Denise, we’ll see who the voters believe. Thank you for making your partisanship as clear as mine is.

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