REALITY CHECK: WHAT CUTS WILL BE MADE TO MEDICARE AND HOW IT WILL AFFECT SENIORS

The Congressional Budget Office (CBO) says President Obama’s Patient Protection and Affordable Care Act (or “ObamaCare”) cuts Medicare by $716 billion in the next 10 years alone. But Obama Deputy Campaign Manager Stephanie Cutter says that none of that involves any cut in Medicare benefits. She says the cuts involve only ending taxpayer subsidies to insurance companies, and weeding out waste, fraud and abuse. To use Ms. Cutter’s own words in the video, “Now that’s a flat out lie.”

Most of the $716 billion is cuts in payments to doctors and hospitals for health care provided to seniors under Medicare. Although promised benefits won’t change under orthodox Medicare, in the very act of reducing provider fees, ObamaCare will cause seniors to get less care. According to the Medicare Office of the Actuary’s Memorandum, in about two years, Medicare payments to doctors will fall below Medicaid rates and will fall further with each passing year. Medicaid payments to hospitals will basically match the Medicaid rate, indefinitely into the future, as NCPA Senior Fellows Andrew Rettenmaier and Thomas R Saving find in a recent study.

What will this mean? As Harvard University health economist Joe Newhouse has explained, seniors will likely have to seek care at community health centers and safety net hospitals. In a few short years, hospitals will begin closing and senior citizens will have increasing difficulty obtaining access to care, according to the Medicare Office of the Actuary. This is what Ms. Cutter calls “weeding out waste fraud and abuse.”

Digging into the detailed data in the Annual Report of the Medicare Board of Trustees for 2010, and the supplemental year by year tables accompanying the Annual Report of the Social Security Board of Trustees, reveals the full extent of the year by year Medicare cuts in payments to doctors and hospitals over the long run. The Medicare cuts total $3.223 trillion over the first 20 years under ObamaCare, 2014-2033, for Medicare Part A alone! Adding in the cuts for Medicare Part B brings the total to $1.048 trillion over just the first 10 full years and $4.95 trillion over the first 20 full years. That will affect seniors already retired today, not just future retirees.

The rest of the president’s Medicare cuts are in payments to insurance companies providing Medicare coverage and benefits to the one fourth of seniors who have chosen this option under Medicare Advantage, which is Medicare Part C. Over the next 10 years, the president’s health reform would cut the payments to the insurance companies seniors have chosen to provide this coverage by $156 billion.

Stephanie Cutter calls these Medicare cuts “ending subsidies to insurance companies.” But these Medicare Advantage cuts, IMO will inevitably lead to a loss of benefits provided by these companies, just as reducing Medicare payments to doctors and hospitals results in loss of health care services. That is why Medicare Advantage cuts have now been delayed, by this administration until after the election on 06 November 2012.

Full confirmation of the draconian Medicare cuts involved in ObamaCare comes from the 2010 Financial Report of the United States Government. The data presented discloses the full present value of ObamaCare’s future cuts in payments to doctors and hospitals under Medicare — $15 trillion!

This is not good news for seniors. Consider people reaching age 65 this year. NCPA Senior Fellow Andrew Rettenmaier and Courtney Collins find that under ObamaCare, the average amount spent on Medicare benefits for these retirees over the remainder of their lives will be cut by about $36,000 at today’s prices. That is the equivalent of delaying the retirement age under Medicare from 65 years old to 68 years old. For today’s 55 year olds, the president’s health reform would cut their Medicare benefits by $62,000 over the remainder of their lives. That is the equivalent of delaying their retirement age from 65 to 71. For today’s 45 year olds, the health reform would cut their Medicare benefits by $105,000 over the remainder of their lives. That is the equivalent of delaying their retirement age from 65 to 74.

About Your Uncle Fester

Lead sheepdog at Camp Keebler.
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