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Obama’s Medicare Malpractice

Posted By Tait Trussell On September 22, 2010 @ 12:03 am In FrontPage | 16 Comments

President Obama has inadvertently shafted millions of low-income folks, minorities, and Hispanics that make up a big part of his political base. He did it when he signed his cherished Patient Protection and Affordable Care Act (PPACA). He probably didn’t know what was in the legislation, because it will be neither protection nor affordable to low-income seniors and the disabled, an analysis published Sept. 14 found.

The millions of senior citizens and disabled who get Medicare Advantage (MA) will have their health care sharply reduced. It also will lead to higher expenses for prescription drugs, according to the new analysis by health care experts—James Capretta, senior fellow at the Ethics and Public Policy Center and Robert Book, senior research fellow in health economics at the Heritage Foundation. A MA plan is offered by a private company that contracts with Medicare. It provides Medicare services, plus extra health benefits.

PPACA, known informally as ObamaCare, will not only reduce payments to seniors, it also will reduce the ability of Medicare beneficiaries to make health care choices for themselves. The study looked at every county in the U.S. It found the average beneficiary will lose at least 15 percent of their benefits.

Low income folks and minorities, especially Hispanics, “will bear the brunt of the MA cuts. About three-fourths of the reductions will hit those with incomes of less than $32,400 per year, in today’s dollars,” the study said. According to an American Enterprise Institute commentary, 39 percent of the $529 billion cut from Medicare will come from the Medicare Advantage program– $206.3 billion.

When the changes are fully in effect, according to the Actuary at the Centers for Medicare and Medicaid Services (CMS), 14.8 million seniors and disabled Americans who would have had the benefits of Medicare Advantage before ObamaCare will be denied coverage for many services and will have to come up with more out-of-pocket dollars. About half the people will lose Medicare Advantage coverage entirely.

Others, still clinging to Medicare Advantage, will not only have reduced levels of care but also possibly have different plans that don’t meet their needs as well, the study said.

The new health law chopped Medicare Advantage so deeply to offset some of the new non-Medicare entitlements in the legislation and to reduce the overall cost. But how on earth could a Democrat-structured, Obama-promised legislative mammoth become law when it so abused the Democrat-favored clientele?

Some background: As early as 1982, when Medicare had been in effect for only 17 years, program bureaucrats were frantically trying to hold down costs. The program’s design of fee-for-service (FFS) had serious shortcomings. Despite Medicare’s huge spending, most beneficiaries saw the coverage as so inadequate they would buy supplemental health protection at their own expense.

By 2006, the latest figure available, Medicare covered only 69 percent of the standard FFS beneficiaries’ health care costs, and 91.3 percent of Medicare beneficiaries had some kind of supplemental coverage, the new analysis said.

“Congress sought to address these shortcomings” by giving Medicare beneficiaries access to private-sector coverage options, the analysis explained, “allowing health maintenance organizations (HMOs) for a fixed fee…in exchange for accepting the full insurance risk for patients.” Eventually, other plans were permitted, with payments adjusted so private plans wouldn’t make more than a limited amount of money. In 1997, the program got a new name—Medicare+Choice. Then in 2003, Congress renamed it Medicare Advantage.

“Congress has maintained the approach in which all Medicare beneficiaries pay the same national premium regardless of the actual costs in their local areas. Thus, the system has evolved into a complex, opaque administered-pricing system that uses measured FFS costs in a county as a starting point for determining private- plan payment rates. It then applies different rules for different circumstances in each county.”

This approach to making payments to private plans, the new study said, in a pointed understatement, has “serious flaws”: Using measured FFS costs as a basis for MA payments “locks in massive and irrational regional variations in FFS spending…. FFS payments vary for many reasons unrelated to factors faced by MA programs….In many regions this gives an inappropriate “advantage” to FFS because FFS “pays below-cost rates for services by regulatory fiat”….Finally, using FFS as a reference point for MA payments “may actually penalize successful cost control by MA plans.”

“In time,” the authors suggest, “lower MA payments would lead to reduced MA benefits and enrollment, which could cause FFS spending to rise, reducing or eliminating the cost benefits of more efficient care.”

The CMS actuary projects that enrollment in MA plans by 2017, (when the cuts are fully phased in) will be about half of what it would have been under the law before ObamaCare—14.8 million.

“They either will be unable to enroll in MA plans or no longer find it attractive to do so,” the study authors wrote. Every patient “will experience a loss in the value.”

“Transferring beneficiaries from MA to FFS will also have the secondary effect of increasing Medicaid and Medicare Part D (prescription drug coverage) spending by almost $2.5 billion in 2017. This does not include higher out-of-pocket spending by patients for what will generally be lower levels of health care services. In other words, instead of reducing waste, the MA cuts will simply cut health care….”

The Government Accountability Office (GAO) called misleading a brochure Health and Human Services Secretary Kathleen Sebelius sent to all Americans last summer on Medicare saying ObamaCare improved Medicare Advantage. But the GAO indicated the MA change would “decrease enrollment and result in less generous benefit packages.” Apparently Sebelius had thought only the well-off could afford the extra cost of Medicare Advantage, not realizing so many low-income minorities owned MA and would “bear the brunt.” So, apparently this justified not telling the truth about it.


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