Fix Health Care Policy

Medicare is shaping up to be a deciding factor in the debate over our nation’s future.

As Heritage’s Bob Moffit and Alyene Senger explain in a recent paper, “Why Traditional Medicare Must (and Will) Be Reformed,” the status quo in Medicare is unsustainable and unacceptable due to the program’s structural and financing flaws.

Here are a few reasons Medicare needs to be reformed:

• Medicare spending is growing faster than any other federal program. Medicare spending has reached unsustainable levels and is contributing to our budget deficits more quickly than any other program. Further, over the long term, Medicare has made $37 trillion worth of benefit promises to future seniors that are simply not funded. The hospital insurance trust fund is projected to be insolvent by 2024. 
• While seniors have paid for their benefits, their payments do not cover the costs of the program. In 2011, approximately 88 percent of Medicare’s spending was funded by taxpayers. A large part of the problem is the erroneous belief that seniors have fully paid for their benefits. In fact, Moffit and Senger explain that, “on average, a one-earner couple who retired at age 65 in 2011 and earned an average wage will have paid just $60,000 into the program but will receive an estimated $357,000 worth of benefits.”
• Medicare enrollment is set to skyrocket. Baby boomers have already begun to retire. At the current rate of retirement, the program will enroll 10,000 beneficiaries into Medicare every day from 2011 to 2030. Moffit and Senger explain that “enrollment is expected to jump from 48 million beneficiaries in 2011 to 81 million by 2030.” This is coupled with a 50 percent decrease in the proportion of workers contributing to the hospital insurance trust fund over the same period. The outlook: more beneficiaries and fewer workers paying taxes to support them.

Read the rest on The Foundry…

Tags: coverage, graphs, Medicare, myths, ObamaCare, payments, pictures, spending

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:

Kaiser Study on Medicare Assumes Seniors Don’t Like Lower Prices (Drew Gonshorowski)

The Heritage Foundation, 10/16/12

“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.”

Presidential Debate Prep: Understanding Obamacare’s $716 Billion in Cuts to Medicare (Bob Moffit and Alyene Senger)

The Heritage Foundation, 10/16/12

“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.”

The Problem with Kaiser’s Premium Support Study? Seniors Are Smarter Than That—and So Are Health Plans (Joe Antos)

AmericanEnterpriseInstitute, 10/15/12

“The Kaiser report emphasizes a worst-case scenario. To reach their conclusion, the authors assume that no beneficiary would change health plans even if a less expensive option would save them hundreds of dollars a month.”

Read the rest on The Foundry…

Tags: Medicare, myths, ObamaCare, premium support, repeal the law, Seniors

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.

See the video on The Foundry…

Tags: $6400, federal health program, Heritage Action, Medicare, myths, ObamaCare

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.

Read the rest on The Foundry…

Tags: choice, efficiency, health plans, Kaiser Family Foundation, Medicare, premium support

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)

Read the rest on The Foundry…

Tags: $716 billion, Congressional Budget Office, Medicare, Medicare Advantage cuts, presidential debate, spending

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:

Commentary:

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.”

Read the rest on The Foundry…

Tags: beneficiaries, Medicare, Medicare Advantage, myths, premium support, truth

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.”

Read the rest on The Foundry…

Tags: cookie jar, Joe Biden, Medicare, nursing homes, Paul Ryan, vice presidential debate, voucher

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.

Read the full reaction on The Foundry…

Tags: health care, Joe Biden, Medicare, ObamaCare, Paul Ryan, vice presidential debate

In recent weeks, liberal politicians, editorialists, and policy analysts have vigorously attacked reform of Medicare based on 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). Much of this criticism is distorted, misleading, or just plain wrong.

Here are some articles that set the record straight:

Read the full list on The Foundry…

Tags: Medicare, Medicare Advantage, misleading, myths, premium support

President Obama made an oft-repeated claim on Medicare during Wednesday night’s presidential debate that distorts attempts to reform the program.

The president accused Governor Mitt Romney of favoring a “voucher” program for Medicare, by citing, ironically, a plan previously supported by Romney’s running mate, Representative Paul Ryan. The voucher label can be politically toxic, but bears little resemblance to Ryan’s actual Medicare proposal (in its most recent iteration).

Heritage’s Robert Moffit explained in a National Review column:

It’s all scary nonsense. The Ryan proposal, among others, is a defined-contribution system that in, say, 2023 would provide direct payment from a government account to a health plan of a person’s choice, including traditional Medicare; health plans, including employer-based retiree plans, would have to meet government standards, including benefit standards of the traditional Medicare program, plus new and much-needed protections against the costs of catastrophic illness; all such plans would be offered through a Medicare exchange; all such plans would be governed by existing Medicare insurance rules, meaning persons could not be legally denied coverage or dropped merely because they are sick; low-income persons would be specially protected from unforeseen out-of-pocket cost hikes; and all enrollees would benefit from an improved risk adjustment among plans in the competitive market to guarantee continuity of patient care and health-plan stability.

A voucher is, of course, a defined contribution; but not all defined contribution programs are “vouchers.” A voucher is just one form of defined contribution. TheMerriam Webster definition of a voucher is a “form or check indicating a credit against future purchases or expenditures.” Many ordinary Americans have had some experience with vouchers when their flights were cancelled or delayed, and airlines issued them compensatory certificates redeemable in cash value for the purchase of food and lodging.

Read the rest on The Foundry…

Tags: Gov. Mitt Romney, Medicare, myth, ObamaCare, premium support, President Obama, presidential debate, voucher