Last month the Obama administration moved forward with new Medicare spending cuts that few outside ardent industry observers noticed. If put into place, however, these cuts will mean significantly less money in the pockets of some 14 million senior citizens around the country.
With health care costs projected to rise another three percent, these reductions couldn’t come at a worse time.
When President Obama signed the Affordable Care Act into law, he simultaneously authorized $200 billion in cuts to the Medicare Advantage program. At the time, the Congressional Budget Office projected that the health care reform law’s cuts would result in three million fewer Medicare Advantage enrollees. Moreover, actuaries at Oliver Wyman predicted that the cost of the health insurance tax would mean an additional $3,500 in out-of-pocket expenses for seniors over the next 10 years.
If all that weren’t bad enough, a few weeks ago the Centers for Medicare and Medicaid Services (CMS) proposed an additional 2.3 percent reduction in Medicare Advantage payments for 2014. This new reduction, combined with the cuts in the health care law, mean Medicare Advantage payments next year will go down by more than eight percent, or about $11 billion.
Oliver Wyman calculates the impact in 2014 will be $50 to $90 per month — in some combination of benefit cuts and premium increases — per senior participant. Once the mandated Obamacare cuts are fully implemented, the impact will worsen significantly.
It’s time for seniors to stand up and say enough is enough.
Medicare Advantage is the one program that allows seniors to choose a plan that offers coverage through a private company rather than a government agency. Much to the chagrin of the Obama administration, 28 percent of all Medicare beneficiaries — 14 million — rely on Medicare Advantage.
Participation among minority groups is even higher: 31 percent for African-Americans, 38 percent for Hispanics. Forty-one percent of all beneficiaries have incomes of $20,000 or less. However, 61 percent of minority beneficiaries are in that low-income group. Bad as it is for everyone, the CMS’s proposed cuts to Medicare Advantage will disproportionately affect minority, low-income senior citizens.
These administrative actions will force millions of seniors into the government-run Medicare they already chose to reject. According to the CMS’s own numbers, enrollment in Medicare Advantage fell for several years after the program was faced with significant cuts in the Balanced Budget Act of 1997. And between December 2001 and December 2002, enrollment dropped by more than 900,000. Those who stayed in the program saw higher premiums and reduced benefits and coverage.
And, what of those in the low-income category? They’ll be shouldering the brunt of the higher premiums. According to Oliver Wyman, “those who utilize services the most will be required to pay even higher cost sharing or be forced by higher MA premiums or loss of access to MA plans to move back into FFS Medicare …”
Furthermore, according to a 2010 analysis by the Heritage Foundation’s Robert Book and James Capretta, the grisly truth is that the reform law’s cuts in payments to Medicare Advantage and the subsequent premium hikes and reduced benefits will only drive would-be Medicare Advantage enrollees into a government-run Medicare program. The net effect is that spending will be transferred from one program to the other, not reduced.
So why not fund Medicare Advantage and allow the millions of senior enrollees, particularly low-income and minority seniors, to keep the coverage they already have?
Barack Obama repeatedly pledged, “If you like your health care plan, you can keep it. If you like your doctor, you can keep your doctor.” But, the war he is waging against Medicare Advantage will give lie to both of those promises.
It’s time for Washington to stop playing politics with seniors’ medical care and continue to allow private companies to compete in the Medicare marketplace. Simply forcing more and more Americans to become dependent on the federal government is no way to go about real reform. The Obama administration can, and should, stop these cuts before it’s too late.
Bob Beauprez is a former Republican congressman from Colorado.