Today, I found myself in a “discussion” with a right winger on Facebook regarding their attack on Obama over the $716 billion dollar figure Republicans are accusing Obama of cutting from Medicare. I decided to attempt to explain it as best I could. Follow me below the orange squiggly for my response:
I decided to open up by quoting directly from the Congressional Budget Office, who wrote:
“Those amounts do not encompass all of the budgetary impacts of the ACA because that legislation has many other provisions, including some that will cause significant reductions in Medicare spending and others that will generate added tax revenues, relative to what would have occurred under prior law.”An interesting fact about the origin of that $716 billion dollar number, is that it originates not from a full report, such as the one listed above, but from a letter from the CBO to John Boehner explaining the estimated costs of repeal. That exact section is stated as such:
-Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision
“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 non-coverage provisions of the ACA”There is a great piece in the Washington Post in which Sarah Kliff explains exactly how these numbers came about, and what it means for Medicare. In this article, she explains that the ACA provision trimmed future spending on Medicare, not current benefits as those are covered under the ACA. These are therefore savings. Those cuts to future spending come from three areas:
--Congressional Budget Office Letter to John Boehner (July 24, 2012)
-- other cuts (explained later)
Kliff explains that:
“The whole idea of Medicare Advantage was to drive down the cost of health insurance for the elderly as private insurance companies competing for seniors’ business.From my general understanding, Medicare Advantage is a program that allows seniors to receive private insurance while the government pays for it. This program is not really needed in its current form under the new ACA laws, as seniors will have access to lower cost private insurance at the government's expense.
“That’s not what happened. By 2010, the average Medicare Advantage per-patient cost was 117 percent of regular fee-for-service. The Affordable Care Act gives those private plans a haircut and tethers reimbursement levels to the quality of care administered, and patient satisfaction.”
The ACA also trims some of the costs it was paying hospitals in reimbursements, providing more savings than under the current laws in 2013-2022. Moreover, the “other” category consists of smaller savings such as reductions in the costs of Medicare spending (Medicare’s Disproportional Share Payments) where hospitals receive payments for seeing patients who lack insurance. These are no longer needed under the Affordable Care Act, as the numbers of uninsured Americans drastically declines.
I am adding here for Daily Kos members, that I am doing a bit of paraphrasing of Kliff's article as it was so well written.
However, these are not cuts, they are savings. They in no way affect anyone's current Medicare benefits. What they do is trim off some of the expenses of running the program that are now covered by the ACA by: reducing costs associated with Medicare Advantage, reducing the amounts being paid in reimbursements to hospitals, reducing the amounts being subsidized for uninsured patient care to hospitals, which result in massive saving under the ACA. The Republicans estimate that in order for them to repeal the ACA medicare would have to increase spending by $716 billion, Obama DID NOT cut Medicare by $716 billion. To state otherwise would be dishonest.
That was my attempt to explain a rather complicated process. I would love some feedback from Daily Kos members on how to better break it down, or how to better understand the numbers to improve my position and wording.
6:48 AM PT: I wanted to update and try to clarify what Healthcare.gov explains about the ACA and Medicare Advantage:
This complex interaction between Medicare and
the ACA is at the core of what the Republicans are attacking on. Healthcare.gov, which tries to explain it implies that Medicare Advantage will still remain, but that
"Starting in 2014, the Affordable Care Act offers additional protections for Medicare Advantage Plan members by taking strong steps that limit the amount these plans spend on administrative costs, insurance company profits, and things other than health care."
This may be a better explanation than I could give late late night when I was doing this research. However, it also stands to reason that by providing lower costs care through the 80/20 rule, and providing preventative care etc. far less seniors will also need to utilize Medicare Advantage.