Californian minorities, low-income seniors fear Obamacare’s latest pinch

Lindsay Boyd Director of Policy, Beacon Center of Tennessee
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Americans are beginning to see the implications of the 2014 roll-out of Obamacare rear their ugly heads, brewing controversy likely to make the transition to the new healthcare reform a rocky one — this time, in one of the biggest, Obama-blue states in the country: California.

The California Association of Physician Groups (CAPG), which represents 150 groups that employ or contract with nearly 60,000 California doctors and provide care to 18 million Californians, made news on Friday by denouncing the Affordable Care Act’s (ACA) mandated cuts for Medicare spending reductions to Medicare Advantage plan payments over the next year. CAPG is responding to the Centers for Medicare & Medicaid Services (CMS) announcement last week of a 2.2 percent reduction in Medicare Advantage (MA) that, compounded with other reductions already in the new healthcare reform — such as the health insurance sales tax — will have the net effect of reducing payments to Medicare Advantage plans by 7 to 8 percent by 2014.

More than 14 million American seniors, or roughly 28 percent of all Medicare beneficiaries in the U.S., are enrolled in a Medicare Advantage plan. The percentage of Californians on Medicare who have chosen MA plans is among the highest of all the states at 38%, just behind Hawaii, Oregon, Arizona and Pennsylvania. The proposed cuts by the CMS to Medicare Advantage plans amounts to an average increased cost of $3,882 per beneficiary in California by 2017 — alarming news to low-income seniors and minorities who largely rely on the options afforded to them through MA coverage.

According to the new report by the Medicare Current Beneficiary Survey (MCBS):

  • 31 percent of African-American Medicare beneficiaries and 38 percent of Hispanic beneficiaries are enrolled in Medicare Advantage plans.
  • 41 percent of Medicare beneficiaries with Medicare Advantage coverage had incomes of $20,000 or less.
  • 27 percent of Medicare beneficiaries with incomes of $10,000 or less were enrolled in Medicare Advantage plans. 61 percent of all minority (nonwhite) beneficiaries enrolled in Medicare Advantage in 2011 had incomes of $20,000 or less; 59 percent of African-American and 75 percent of Hispanic Medicare Advantage beneficiaries had incomes of $20,000 or less.

Unfortunately, seniors in high-enrollment states like California will not only be paying more for their MA coverage, but they will likely experience difficulties receiving their care. As John C. Goodman, a research fellow at the Independent Institute and the author of Priceless: Curing the Healthcare Crisis, warned in his column at the Wall Street Journal:

“30 million people are expected to acquire health plans — and if the economic studies are correct, they will try to double their use of the health-care system. A 2007 study of California in the Annals of Emergency Medicine showed that up to 20% of the patients who entered an emergency room left without ever seeing a doctor, because they got tired of waiting. Be prepared for that situation to get worse.”

The influx of those receiving health insurance through the ACA coupled with the decrease in compensation for care doctors provide to Medicare Advantage patients means that doctors will be forced to prioritize care. As Goodman asserts:

“When demand exceeds supply, doctors … tend to see those patients first who pay the highest fees. A New York Times survey of dermatologists in 2008 for example, found … for patients in need of services covered by Medicare, the typical wait to see a doctor was two or three weeks.”

The California Association of Physician Groups’ statement from Friday echoes Goodman’s warning, calling the CMS proposals “short-sighted” and suggesting the cuts “will have long-term negative consequences for care delivery in California and across the country.” These unintended consequences are symptomatic of a flawed assumption that government-mandated healthcare, rather than market-based incentives, equates to greater opportunities for minorities and low-income Californians, and Americans at large.

Lindsay M. Boyd is the communications director for the Independent Institute in Oakland, California.