Archive for October, 2012
You’ve probably heard some scary things about Medicare reform lately. Words like “vouchercare” and an alleged $6,400 cost increase are now permanently etched into liberal talking points — even though these myths have been debunked time and again. Our colleagues at Heritage Action are keeping a running tally of the most outrageous myths.
Now you can play along, too. Today we introduce a new quiz show called Medicare Myths. Watch the video to see the biggest whoppers from opponents of Medicare reform. Our first episode features House Minority Leader Nancy Pelosi, Reps. Debbie Wasserman Schultz, Shelley Berkley, Chris Van Hollen, and MSNBC host Al Sharpton.
Why should you care? Medicare is the fastest-growing federal program. Every day, approximately 10,000 seniors become eligible to receive benefits. Without reform, Medicare is unsustainable.
Obamacare includes many disastrous consequences for America’s health care system. Contributing to the impending mess are these 10 provisions that clearly elude common sense.
- Expanding a program that one in three doctors won’t accept. Obamacare expands a broken Medicaid program that already faces a severe access problem: One out of three Medicaid doctors will not accept new Medicaid patients. If the Obama Administration has its way and every state expands Medicaid, 17 million Americans will be added to the rolls—5.6 million of whom will join the other Medicaid patients who can’t find a doctor.
- Giving Medicaid doctors a pay raise—for two years. Obamacare increases the payment rate for Medicaid primary care doctors up to Medicare payment levels in 2013 and 2014. After those two years, Medicaid doctors will face about a 22 percent payment cut.
- Giving more government money to low-income Americans in the exchanges than to those in Medicaid. The Congressional Budget Office estimates that every low-income individual who chooses to enroll in the new exchanges instead of Medicaid will increase federal spending by roughly $3,000 in 2022, because exchange subsidies will be more generous than the cost of coverage in Medicaid.
The Kaiser Family Foundation just released a study that grossly misrepresents the premium-support model of Medicare reform and apparently misunderstands normal market dynamics and the differences between efficiency, choice, and higher premiums.
The Kaiser study assumes that an entire class of Americans—senior citizens—is insensitive to price. In reality, seniors are price sensitive when they are presented with options. Already, 90 percent of retirees can and do choose the private health plans they like, ranging from supplemental insurance to Medicare Advantage and Medicare drug plans. Premium support encourages intense competition that will change premiums and hold down costs. The larger impact is that seniors would have a choice of the health options they want, while creating needed savings for themselves and the federal government.
Take a simple analogy: Assume that the price of a gallon of gasoline rose from $3 to $300. How much would this affect your driving habits? It is doubtful that you would still buy the same amount of gas every week. Yet that is the economic intuition embodied in the Kaiser study.
The authors of the Kaiser study assume that zero beneficiaries would switch from traditional Medicare to a cheaper plan, despite cost increases. Part of the gain from competition is that health plans must compete for beneficiaries in order to retain or gain market share. They have to secure high satisfaction, as they do today, for example, in Medicare Part D and Medicare Advantage. To create a scenario that simply ignores the gains of market competition grossly misrepresents the economic impact of any consumer-driven market, including a health care market with premium support. The study’s headline is that 53 percent of enrollees in traditional Medicare would pay more, but within the study, when benificiaries respond to higher premiums, the number falls to as low as 33 percent.
As the Medicare debate intensifies, there still seems to be popular confusion regarding the $716 billion in “savings” from Obamacare’s Medicare payment cuts. Let us end the confusion.
Which Parts of Medicare Will Be Cut?
In Obamacare, the payment cuts are across-the-board cuts (modifications of Medicare’s complex payment formulas) made throughout the bulk of the Medicare program. According to the nonpartisan Congressional Budget Office (CBO), these cuts will decrease Medicare spending by an estimated $716 billion between 2013 and 2022.
The money is cut from hospital services, Medicare Advantage, skilled nursing services, hospice services, and other Medicare services. To be clear, the cuts do not target individual institutions or medical organizations suspected of waste, fraud, or abuse. (continues below chart)
In recent weeks, liberal politicians, editorialists, and policy analysts have vigorously attacked reform of Medicare based on a defined contribution financing. In fact, this approach to reforming Medicare has a long bipartisan tradition, going back to the 1980s and Representatives Richard Gephardt (D–MO) and David Stockman (R–MI). In fact, much of this criticism is distorted, misleading, or just plain wrong.
Here are some articles that set the record straight:
Obama’s Medicare Cuts Will Affect Benefits (Bob Moffit)
National Review Online, 10/12/12
“Question: If you cut funding for benefits, will you then affect persons dependent upon those benefits? Of course you will. Financing directly affects the quantity and quality of the benefits available to the beneficiaries.”
Vice Presidential Debate: True/False Quiz on Medicare (Alyene Senger)
The Heritage Foundation, 10/12/12
“During the debate between Vice President Joe Biden and Representative Paul Ryan, several claims were made about Medicare. Some of these were true, others false.”
During the debate between Vice President Joe Biden and Representative Paul Ryan, several claims were made about Medicare. Some of these were true, others false. See which ones you can guess right:
Biden: “We saved $716 billion and put it back, applied it to Medicare.”
False. According to the Congressional Budget Office (CBO), Obamacare cuts Medicare by $716 billion and uses that money to fund new spending under Obamacare. It does not strengthen Medicare at all. (For all of the “fact checkers” out there, these are across-the-board administrative cuts based on a specific formula. They do not target waste, fraud, or abuse. They come from Medicare Advantage (MA), hospital services, nursing homes, and more. For a full list, click here.)
Ryan: “They got caught with their hands in the cookie jar, turning Medicare into a piggybank for Obamacare. Their own actuary from the Administration came to Congress and said one out of six hospitals and nursing homes are going to go out of business as a result of this.”
True. According to the Medicare Actuary, “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries). Simulations by the Office of the Actuary suggest that roughly 15 percent of Part A providers [hospitals and nursing homes] would become unprofitable within the 10-year projection period as a result of the productivity adjustments.”
Tonight at Centre College in Danville, KY, Vice President Joe Biden squares off against Representative Paul Ryan in their one and only encounter on the national stage. Both domestic and foreign policy topics are on the agenda for the vice presidential debate. Heritage is streaming it live and has a team of experts reacting on our Debate 2012 page.
Heritage’s policy experts are closely following every word of the vice presidential debate between Vice President Biden and Representative Paul Ryan. They are reacting instantly to the wide range of policy issues being discussed. The following is a compilation of their analysis.
Recent analysis by the Urban Institute says that Obamacare has “a negligible impact on total employer-sponsored coverage and its costs.” But a closer look at the results of the study uncovers some other important points:
- Two-thirds of employees observe decreases in wages while their employers deal with increasing costs. The Urban Institute claims that mid-size firms will see spending per person increase by 4.6 percent, while large firms will see spending increases by 0.3 percent per person. According to the U.S. Census, this accounts for 65.1 percent of employees—or roughly 79 million—in the U.S. who are employed by medium- or large-size firms. The study suggests: “Any increase in employers’ health-related costs will be offset by decreases in other compensation—whether wages or other benefits.” This means that individuals in mid- and large-size firms will receive less in take-home wages (or other benefits) and pay a greater proportion of their compensation to health care due to Obamacare.
- The study does not take into account a “wage floor.” The study assumes that adjustments to compensation can occur in benefits and wages for all workers, but there are instances where, if wages and benefits are already low, they could not be lowered any further to pay for increases in health care costs. We already observe service industries trying new methods through moving workers from full- to part-time employment in order to avoid increased Obamacare costs.
As health care becomes an increasingly debated topic, it is critically important for every American to understand the impact of Obamacare. The Heritage Foundation’s newly updated “Obamacare in Pictures: Visualizing the Effects of the Patient Protection and Affordable Care Act” shows through charts and graphs Obamacare’s far-reaching negative effects on all Americans. (continues below slideshow)
Here are a few examples of what the chart series depicts:
- Obamacare’s cuts to Medicare. Obamacare cut $716 billion out of the Medicare program to pay for new spending in Obamacare. These cuts come from Medicare Advantage, hospice services, nursing homes, and more. Taking this money out of Medicare will have serious implications on seniors’ ability to access care. For instance, the Medicare Actuary predicts that by 2017, 50 percent of the seniors enrolled in Medicare Advantage—7.4 million—will have to leave their private plans and move into traditional Medicare—which offers less generous benefits, no cap on catastrophic costs, and separate plans for drug coverage.
Opponents to Medicare reform have been making plenty of erroneous claims about Medicare premium support lately, one of the worst being that Representative Paul Ryan’s (R–WI) premium-support model, co-authored by Senator Ron Wyden (D–OR), would cost future seniors an extra $6,400 a year. This claim is simply false.
Buried beneath the wild and scary allegations are the facts, which Heritage expert Rea Hederman details in his recent paper “Why Medicare Premium Support Would Not Cost Future Beneficiaries $6,400 More.”
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