Part two in a three-part series
According to the Congressional Budget Office, Obamacare will cost at least $938 billion over the next decade. So here’s the big question: Who is going to pay for it? The answer is … drum roll please … senior citizens.
As it turns out, more than half this bill will be covered through cuts in Medicare spending.
Medicare affects an enormous portion of the population. In 2008, it covered more than 45 million Americans. Roughly 38 million of them were 65 or older. The other 7 million were disabled.
All told, the president’s health care bill will cut Medicare by $575 billion over 10 years, according to the Centers for Medicare and Medicaid Services. Seniors and the disabled are going to see their costs rise and their quality of care suffer.
Medicare is an expensive program, and it could certainly benefit from some streamlining. In fact, Medicare fraud has grown into a $60 billion-a-year business.
But the legislation does virtually nothing to curtail fraud. Instead, it takes a slash-and-burn approach. Most troubling, the legislation attacks Medicare Advantage, the one aspect of Medicare that’s working particularly well.
Under Medicare Advantage, private insurance companies offer an alternative to traditional Medicare. It’s not difficult to understand why the Democrats targeted this program.
Big-government types detest Medicare Advantage because it outsources to the private sector. Obamacare will cut it by $202 billion over 10 years, according to CMS.
“If you like your health care plan, you’ll be able to keep your health care plan, period,” Obama declared while campaigning for his legislation. “No one will take it away, no matter what.”
That’s certainly not true for the seniors on Medicare Advantage, who will see many of the benefits they’ve been enjoying vanish — along with their better health outcomes.
In 2011, the government will freeze payments to Medicare Advantage plans at current levels. Beginning in 2012, it will start actually reducing payments. Those cuts will then phase over two to six years.
The president claims that this is about “eliminating waste.” But the facts don’t bear it out.
It’s true that Medicare Advantage patients cost the government more than regular Medicare patients. But MA patients also get more — more benefits even than the government is paying for.
Medicare Advantage plans are health maintenance organization plans that are provided by private insurers. These plans offer far more choice than traditional government care, so they’ve become very popular in recent years.
The number of MA enrollees nearly doubled from 5.3 million in 2003 to 10.2 million in 2009. Currently about 22 percent of Medicare beneficiaries are in Medicare Advantage plans, and cuts to this program will affect a sizable portion of our seniors — making them worse off.
Medicare Advantage is also more cost-effective for taxpayers. Unlike its government-run brethren, Medicare Advantage doesn’t shift costs onto the privately insured, which means that when MA is cut, and more people shift over to regular Medicare, those extra costs will be borne by the privately insured.
Today, over 12 percent of Americans are senior citizens — and that figure is growing rapidly as more and more baby boomers turn 65. Assuming we live long enough, all of us will end up with Medicare coverage eventually.
Medicare is a big, expensive program — and costs do need to be contained. But Obamacare takes the wrong approach. It guts the best parts, exacerbates cost shifting and sets the stage for future rationing.
This is hardly the right way to take care of our oldest citizens.
Sally Pipes is president of the Pacific Research Institute and author of the new book “The Truth About Obamacare.”