Medicare Cuts Under Obamacareby Denise Early on Aug. 16, 2012, under Health
“Obama cuts $716 billion from Medicare!” That’s what Mitt Romney and Paul Ryan say.
“Obamacare saves Medicare $716 billion!”, according to Democrats.
Who is right, and where do these cuts/savings come from? According to the Washington Post:
The majority of the cuts come from reductions in how much Medicare reimburses hospitals and private health insurance companies.
These cuts do not affect seniors and disabled Americans enrolled in Medicare. According to the Washington Post:
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.
Medicare Advantage cuts:
That program 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.
Hospital payment cuts:
Another big chunk comes from the hospitals. The health law changed how Medicare calculates what they get reimbursed for various services, slightly lowering their rates over time. Hospitals agreed to these cuts because they knew, at the same time, they would likely see an influx of paying patients with the Affordable Care Act’s insurance expansion.
Some of the money being cut/saved from future Medicare spending is used to offset the cost of other parts of Obamacare, such as subsidies for moderate-income Americans who will get help to pay their health insurance premiums.
But the cuts/savings also keep more money in the Medicare Trust Fund and, according to the Congressional Budget Office, will keep Medicare’s budget fully funded through 2024. Without these cuts/savings, Medicare will start running short of money in 2016.
What happens if Obamacare is repealed? According to the Washington Post article:
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.”
So that’s where the $716 billion figure came from!