Affordable Care Act Savings Do Not ‘Cut’ Medicare Benefits

PolitiFact: Affordable Care Act Does Not Cut Medicare’s Budget, It Attempts To Reduce Future Costs. According to PolitiFact, “Neither Obama nor his health care law literally cut a dollar amount from the Medicare program’s budget. Rather, the health care law instituted a number of changes to try to bring down future health care costs in the program.” [PolitiFact, 8/15/12]

Medicare Spending Reductions “Aimed At Insurance Companies And Hospitals, Not Beneficiaries.” According to PolitiFact: “What kind of spending reductions are we talking about? They were mainly aimed at insurance companies and hospitals, not beneficiaries. The law makes significant reductions to Medicare Advantage, a subset of Medicare plans run by private insurers. Medicare Advantage was started under President George W. Bush, and the idea was that competition among the private insurers would reduce costs. But in recent years the plans have actually cost more than traditional Medicare. So the health care law scales back the payments to private insurers. Hospitals, too, will be paid less if they have too many re-admissions, or if they fail to meet other new benchmarks for patient care. Obama and fellow Democrats say the intention is to protect beneficiaries’ coverage while forcing health care providers to become more efficient.” [PolitiFact, 8/15/12]

• CBO’s July Estimate Updates Medicare Cost Savings To $716 Billion. According to the Congressional Budget Office’s analysis of a bill to repeal the Affordable Care Act, repeal would have the following effects on Medicare spending: “Spending for Medicare would increase by an estimated $716 billion over that 2013–2022 period. Federal spending for Medicaid and CHIP would  increase by about $25 billion from repealing the noncoverage provisions of the ACA, and direct spending for other programs would decrease by about $30 billion, CBO estimates. Within Medicare, net increases in spending for the services covered by Part A (Hospital Insurance) and Part B (Medical Insurance) would total $517 billion and $247 billion, respectively. Those increases would be partially offset by a $48 billion reduction in net spending for Part D.” [CBO.gov, 8/13/12]

GOP Plan Kept Most Of The Savings In The Affordable Care Act. According to the Washington Post’s Glenn Kessler: “First of all, under the health care bill, Medicare spending continues to go up year after year. The health care bill tries to identify ways to save money, and so the $500 billion figure comes from the difference over 10 years between anticipated Medicare spending (what is known as ‘the baseline’) and the changes the law makes to reduce spending. […] The savings actually are wrung from health-care providers, not Medicare beneficiaries. These spending reductions presumably would be a good thing, since virtually everyone agrees that Medicare spending is out of control. In the House Republican budget, lawmakers repealed the Obama health care law but retained all but $10 billion of the nearly  $500 billion in Medicare savings, suggesting the actual policies enacted to achieve these spending reductions were not that objectionable to GOP lawmakers.” [WashingtonPost.com, 6/15/11, emphasis added]

Affordable Care Act Strengthens, Not Weakens, Medicare’s Finances

“The Medicare Trust Fund Will Last Eight Years Longer” Thanks To Health Care Law. The Huffington Post reported: “The Medicare trust fund will last eight years longer than it would have without the passage of last year’s health care law, the program’s trustees announced Friday in a report. The nonpartisan lead actuary for Medicare, Rick Foster, estimated that without the health care overhaul, the program’s trust fund would have run dry by 2016. With the law in effect, Foster projected, the trust fund will last through 2024.” [Huffington Post, 5/13/11]

Repealing ACA’s Medicare Savings “Would Hasten The Insolvency Of Medicare By Eight Years.” According to the New York Times: “Mitt Romney’s promise to restore $716 billion that he says President Obama ‘robbed’ from Medicare has some health care experts puzzled, and not just because his running mate, Representative Paul D. Ryan, included the same savings in his House budgets. The 2010 health care law cut Medicare reimbursements to hospitals and insurers, not benefits for older Americans, by that amount over the coming decade. But repealing the savings, policy analysts say, would hasten the insolvency of Medicare by eight years — to 2016, the final year of the next presidential term, from 2024. While Republicans have raised legitimate questions about the long-term feasibility of the reimbursement cuts, analysts say, to restore them in the short term would immediately add hundreds of dollars a year to out-of-pocket Medicare expenses for beneficiaries. That would violate Mr. Romney’s vow that neither current beneficiaries nor Americans within 10 years of eligibility would be affected by his proposal to shift Medicare to a voucherlike system in

Affordable Care Act Ends “Overpayments” To Private Medicare Advantage Plans

The Law Does Not End Medicare Advantage. From PolitiFact: “The health care law includes $136 billion in projected savings that would come from changes to the Medicare Advantage program — a privately run, Medicare-funded plan akin to managed care health insurance. […] There’s no question that Medicare Advantage is taking a disproportionate share of the cuts made by the new law. But ‘destroying’ is too strong a word — few doubt that Medicare Advantage will continue to exist and draw beneficiaries. And these savings need to be taken in some context.” [PolitiFact.com, 3/22/12]

Medicare Advantage Is A Private Alternative To Traditional Medicare. According to the Kaiser Family Foundation: “Since the 1970s, Medicare beneficiaries have had the option to receive their Medicare benefits through private health plans, mainly health maintenance organizations (HMOs), as an alternative to the federally administered fee-for-service Medicare program.  The Balanced Budget Act (BBA) of 1997 named Medicare’s managed care program ‘Medicare+Choice’ and the Medicare Modernization Act (MMA) of 2003 renamed it ‘Medicare Advantage.’” [KFF.org, November 2011]

New England Journal Of Medicine: Affordable Care Act Eliminates “Substantial Overpayments” To Medicare Advantage Plans. From an article by Robert A. Berenson in The New England Journal of Medicine: “[T]he currently projected savings come from two main sources: reduced payments to private Medicare Advantage plans and reduced payment updates for hospitals and most other providers. A phased elimination of the substantial overpayments to Medicare Advantage plans, which now enroll nearly 25% of Medicare beneficiaries, will produce an estimated $132 billion in savings over 10 years… The Medicare Payment Advisory Commission (MedPAC) has been calling for such fee reductions for years, to keep Medicare Advantage from undermining traditional Medicare. The ACA also produces nearly $200 billion in savings by assuming that providers can improve their productivity as firms in other industries have done. On the basis of this presumed improvement, the law reduces Medicare’s annual ‘market basket’ updates for most types of providers — a provision that has generated controversy.” [The New England Journal of Medicine, 7/8/10]

“Overpayments” To Medicare Advantage Drive Up Premiums For Medicare Beneficiaries. According to the Center on Budget and Policy Priorities: “In 2010, Medicare is estimated to pay private Medicare Advantage health plans between 9 and 13 percent more per enrollee than it costs to cover the same person under traditional Medicare. These overpayments, which average more than $1,100 for each Medicare Advantage beneficiary, cost Medicare nearly $44 billion between 2004 and 2009. Despite insurers’ claims, a large portion of the overpayments benefit insurers rather than provide additional benefits to enrollees. For example, the Medicare Payment Advisory Commission (MedPAC) has found that among private fee-for-service plans — one type of Medicare Advantage plan — less than one-fourth of overpayments go toward additional benefits, on average. […] By increasing Medicare costs, these overpayments also drive up premiums for the 31 million seniors and people with disabilities enrolled in traditional Medicare — by $86 for a couple in 2009. In addition, the overpayments weaken Medicare’s long-term finances. [CBPP.org, 7/27/10, internal citations removed]

Affordable Care Act Reduces “Heftier Payments” To Private Medicare Advantage Plans. From FactCheck.org: “Whatever you want to call them, it’s a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. It’s true that those who get their coverage through Medicare Advantage’s private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits; the bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare.” [FactCheck.org, 3/19/10]

Medicare Board Tasked With Finding Additional Savings Is Forbidden From Cutting Benefits

ACA Establishes An Independent, Senate-Confirmed Board (IPAB) To Find Additional Savings. As explained by the Kaiser Family Foundation: “The 2010 health reform law (the Patient Protection and Affordable Care Act, also referred to as the ACA) establishes a new Independent Payment Advisory Board (IPAB) with authority to issue recommendations to reduce the growth in Medicare spending, and provides for the Board’s recommendations to be considered by Congress and implemented by the Administration on a fast-track basis. […]As authorized by the health reform law, IPAB is an independent board housed in the executive branch and composed of 15 full-time members appointed by the President and confirmed by the Senate. [Kaiser Family Foundation, April 2011]

IPAB Proposals Will Be Implemented Unless Congress Finds Alternative Savings Or Supermajority Overturns Them. According to the Washington Post: “Beginning with fiscal 2015, if Medicare is projected to grow too quickly, the IPAB will make binding recommendations to reduce spending. Those recommendations will be sent to Capitol Hill at the beginning of each year, and if Congress doesn’t like them, it must pass alternative cuts — of the same size — by August. A supermajority of the Senate can also vote to amend the IPAB [spending] recommendations. If Congress fails to act, the secretary of Health and Human Services is required to implement the cuts by default.” [Washington Post, 5/8/11]

IPAB Cannot Recommend “Changes In Premiums, Benefits, Eligibility And Taxes.” According to the Kaiser Family Foundation: “The Board is prohibited from recommending changes that would reduce payments to certain providers before 2020, and is also prohibited from recommending changes in premiums, benefits, eligibility and taxes, or other changes that would result in rationing.” [Kaiser Family Foundation, April 2011]

PolitiFact: “The Law Specifically States That The Board Cannot Ration Care.” According to PolitiFact, “Actually, the law specifically states that the board cannot ration care. The board doesn’t look at individual patients or deny individual treatments. Instead, it makes system-wide recommendations to rein in the future growth of Medicare spending, and it makes those recommendations within limited parameters. It also was created to stop runaway spending growth within the Medicare program itself, not to divert money to other budget items.” [PolitiFact.com, 3/12/12]