Medicare Cuts: What is the Fight About?
“Water For Elephants”
“carrying water for elephants” is a phrase that means carrying a heavy load, much like carrying a secret that you can’t tell even someone you love wholeheartedly, just as in the end Jacob does for his wife
An elephant drinks 25-75 gallons of water a day far more than any man would be able to carry at any given time. http://angela-michelle.hubpages.com/hub/Water-For-Elephants “Water for Elephants” Sometimes when you get older . . . things you think on and wish on start to seem real. And then you believe them, and before you know it they’re part of your history.”
Most recently former NY Lt. Governor Betsy McGaughey in the WSJ (August 8th) commented on the ACA in “ObamaCares’s Phoney Deficit Reduction” choosing to carry water for the Republican candidates Romney and Ryan with the hope she can convince voters that President Obama’s ACA will not reduce the cost of Medicare and instead will rob the Medicare TF. By her words alone, Ms. McGaughey cannot change the numeric of Medicare expected and occurring reduced growth and costs resulting from the passage of ACA. In her, Romney and Ryan’s mines the logic of how the robbery of benefits and the Medicare is all too real even when the proof of the opposite is self-evident. The three will have to do double time if they are to provide enough water to conflate the ACA to the public if in fact they are to make them believe the illusion.
Ms. McGaughey critiques CBO Director Elmendorf’s and the JCT’s analysis (letter to House Leader John Boehner) on the impact of repealing the ACA, what it means to the country in increased costs, and then conflates the cuts to the Advantage Program and other parts of Medicare as actual cuts in benefits to Medicare recipients. The ACA states Medicare benefits cannot be reduced for Medicare recipients.
As operated by commercial insurance companies, the Advantage Program intent was to provide competition to Medicare and separate from Medicare. As Betsy believes and everyone else imagines, private commercial insurance can provide similar benefits at a lower cost and more efficiently. Except the Advantage Program did not do so and has out spent Medicare by an average of $1000 or 7% to 18% (dependent on who you read) more and in total for similar Medicare benefits.
Note: HMO is health maintenance organization; PPO is preferred provider organization.
The very same CBO Director who wrote about the impact of repealing the ACA to House Leader John Boehner and the resulting increased costs was also a part of the CBO team which pounded the final nail into the “Hillarycare” coffin resulting in its demise in Congress. Healthcare then was 20% of the cost of what it is today. I doubt Director Elmendorf has lost any of his boldness since Clinton. So, who is right?
The best way to counter supposition and conjecture by Romney, Ryan, and Ms. McGaughey is to present detail about the cuts and to what they are related , the same as the actual cost of the Advantage program in relation to Medicare. The planned reduction in Medicare costs come from three areas, which also include the government sponsored Advantage program.
30.2% of the planned reduction in Medicare costs will come from the elimination of Advantage subsidies as I stated above. The ACA also applies the same rules to the Advantage insurance programs it applies to hospitals by tying reimbursement (or fees) to quality of outcomes instead of a fee for the number of services provided.
34.8% of the reduction in cost comes from revised calculations in the reimbursement of hospitals for provided services. Hospitals not only give up the pay-for-services cost model to embrace better quality outcomes for services cost model; but, they move to electronic record keeping (which proved to be cost effective with the VA, Longman “Best Care Anywhere“), and the bundling of payments eliminating multiple billings and forcing a split of the total compensation. Knowing the increase in patients coming from the addition of the uninsured, there is also the influx of an aging baby-boomer population, which also influenced hospitals to accept the changes.
35% of the reduction result from a combination of smaller cuts in extra funds ( ~5%) given to hospitals to cover the uninsured (not needed as more people will be covered), reductions in homecare providers (~8%), fraud reduction, etc..
The $716 billion is far larger than the initial $449 billion first reported. In 2010, the CBO arrived at an estimate of savings of ~$449 billion starting from 2012 onwards and covered 6- 7 years from when the bill takes full effect in 2014 to 2019. The second estimate of savings was the result of John Boehner’s request for a review of the costs and gains realized from the repeal the ACA in its entirety. The second review covered the period from 2014 to 2022 and resulted in the $716 billion. http://www.brookings.edu/blogs/up-front/posts/2012/08/15-medicare-cuts-galston “Medicare Cuts: What is the Fight About?”
And what of other things implied?
– Healthcare spending was 17.9% of GDP in 2010 and will rise to 19.6% in 2021. Neglected and a part of the article from which this snippet of CMS information was pulled is this: “ Current projections also do not include potential drops in spending through health care delivery reforms, such as the accountable care organizations and medical homes being promoted by the health law.” In other words, the author projections of $ and % are being made as if the ACA did not exist. The author of this particular article is an MBA and not an economist or a doctor. Quelle Surprise?
– “Repeal also would reduce government spending, lower taxes, and undo the evisceration of Medicare; all good results.” I guess it is still unclear how Medicare is to be eviscerated under the ACA when Obama will plow the results back into Medicare, and the CMS has lengthen the TF out to 2024-2029. Comparing this to Romney wishing to end Medicare and Ryan wanting to keep the very same reductions as the ACA and take the savings for tax breaks, who is eviscerating what?
Healthcare Costs have been decreasing for years? Maybe not so long and since 2009/2010 at the earliest?
Secretary of Heath Kathy Sebelius made the comment in an article that a family of 4 paid ~$6,000 for private insurance in 2000 and ~$12,000 for similar insurance in 2009. http://www.voxxi.com/kathleen-sebelius-affordable-care-act/ “Public Needs To Get Their Facts Straight” Part of this is due to increased administrative costs and much more is a reflection of increased healthcare care costs which insurance and Medicare reflects.
Medicare has had slower growth because it has taken the necessary actions to control much of the costs associated with healthcare through pilot programs, negotiations, etc. The results of its actions are clear in the S&P Indices. The increase in enrollment of healthier patients over the last two recessions has contributed to the slow down; however, it is the ACA which started hospitals and doctors to begin to plan for full implementation and take the steps necessary to meet ACA goals for commercial insurance.
“spending per enrollee slowed to 4.2% annually, as compared with 4.5% among private payers. After large increases in enrollment due to two recessions and the increasing numbers of Americans with disabilities are accounted for, growth of Medicaid spending per enrollee was relatively slow (less than 3% per… http://www.nationaljournal.com/healthcare/both-obama-and-romney-medicare-plans-fail-to-solve-the-cost-problem-20120816 “Medicare and Medicaid Spending Trends and the Deficit Debate”
– And the Pink Cadillac Tax? The ACA does impose a tax on plans exceeding $27,000 and typically carried by executives in the rarefied levels of management. They can always shuck it off and go to one of the insurance exchanges for a cheaper plan with no tax. There is also an excise tax on plans with premiums exceeding $10,200 for individuals or $27,500 for a family tax Other taxes include Increase Medicare tax rate by .9% and impose added tax of 3.8% on unearned income for high-income taxpayers.
So what is the Fight About? It is about whether Romney/Ryan can eliminate Medicare and repeal the ACA, and keep the same proposals President Obama put in play for Medicare but using the savings from it elsewhere (tax breaks – think SS surplus) rather than within Medicare, as both are opposed to Obama plowing the savings back into Medicare. http://www.brookings.edu/blogs/up-front/posts/2012/08/15-medicare-cuts-galston “Medicare Cuts: What is the Fight About?”
Maggie Mahar Health Beat Blog
http://www.cbpp.org/cms/index.cfm?fa=view&id=3161 Federal Government Will Pick Up Nearly All Costs of Health Reform’s Medicaid Expansion
http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/14/romneys-right-obamacare-cuts-medicare-by-716-billion-heres-how/ ” Romney’s right: Obamacare cuts Medicare by $716 billion. Here’s how
http://www.drugchannels.net/2011/08/cms-bright-future-for-drug-spending-in.html CMS Bright Future for Spending . . .
Affordable Care Act Update: Implementing Medicare Cost Savings
http://www.ajhp.org/content/69/5/405.abstract Projecting future drug expenditures—2012
http://www.brookings.edu/blogs/up-front/posts/2012/08/15-medicare-cuts-galston Medicare Cuts: What Is the Fight About?
http://www.kff.org/medicare/upload/2052-11.pdf Medicare Advantage
http://factcheck.org/2012/06/romney-obama-uphold-health-care-falsehoods/ Romney, Obama Uphold Health Care Falsehoods
http://www.voxxi.com/kathleen-sebelius-affordable-care-act/ Public Needs . . .
http://www.reuters.com/article/2012/06/12/us-usa-healthcare-spending-idUSBRE85B1DI20120612 Government forecasts modest health spending growth
http://online.wsj.com/article/SB10001424052702303768104577462731719000346.html?mod=WSJ_hps_LEFTTopStories ” Steep Rise in Health Costs Projected”
http://www.nejm.org/doi/pdf/10.1056/NEJMp1204899 “Medicare and Medicaid Spending Trends and the Deficit Debate”
http://www.urban.org/UploadedPDF/412419-Containing-the-Growth-of-Spending-in-the-US-Health-System.pdf “Containing the Growth of Spending in the U.S. Health System”
With democrats like Ed Rendell out there saying stuff such as follows: “When it comes to Simpson-Bowles, Democrats are wusses too,” says Rendell, referring to the budget commission that recommended a combination of spending cuts and tax increases to slash the deficit by $5.4 trillion over a decade.
“We don’t have the guts to tell seniors the truth,” Rendell says. “When medicare was passed in 1965, the average life expectancy was 69. Today the average life expectancy is 85. Medicare was never meant to cover nearly 20 years of life. It’s got to be changed…there has to be a reshaping of entitlements.”
Who needs enemies?
The wussiness by Democrats and Republicans comes from not telling Simpson and company they are wrong about reshaping Medicare (which is not an entitlement and a necescity)and looking to the overall healthcare industry as the cause of costs increasing. The country can surviv by investing more into Domestic poicy at the expense of expanded miltary. I agree with your comment.