Obamacare already ended Medicare as we know it
“Put simply, it ends Medicare as we know it,” President Barack Obama said on April 13th describing House Budget Committee Chair Paul Ryan’s (R-WI) Path to Prosperity budget plan. Ryan was in the audience at The George Washington University that day, and he got a front row preview of how liberals would be attacking his plan from now through next November. “It ends Medicare as we know it” has become the left’s favorite line on the Ryan plan. But there is just one problem. Obamacare already did exactly that.
Even before Obamacare, Medicare was already on an unsustainable path. According to the most recent Trustees report, Medicare’s hospital program (Part A) is already running a $66 billion current account deficit, while the doctor program (Part B) and drug program (Part D) pay out $216 billion more in benefits than they take in premiums. If these trends continue, the Medicare Trustees report that the Medicare Part A trust fund will go bankrupt by 2016. If that happens doctor’s can expect a 10% cut in their Medicare reimbursements. Obamacare has no plan to stop these cuts. Or others.
In 1997, President Clinton signed the Balanced Budget Act which sought to control Medicare spending through a sustainable growth rate (SGR) which fixed doctor’s Medicare reimbursement payments to a set formula. But subsequent Congress’ have overridden this formula each year without changing the existing formula. As a result Medicare payments to doctor’s are set to drop by 29.4% next year. It would take $400 billion to fix this problem and pay doctors at near market rates through 2019.
But instead of fixing Medicare doctor payments, Obamacare made an additional $233 billion in “market basket” and other doctor payment cuts. In 2009, Medicare paid doctors about 80% of what private health insurance paid. Under the Obamacare Medicare cuts, that number would decline to 57% in 2012.
Liberals believe these price controls can lower Medicare spending without affecting the quality of care Medicare beneficiaries receive. They are wrong. If the Obamacare Medicare cuts actually happen, the administrator of Medicare predicts that 15% of all health care providers will be bankrupt by 2019. And in Health Affairs, Dr. Joseph Newhouse predicted:“…it is equally hard to imagine cutting only Medicare spending while spending by the commercially insured under age sixty-five continues to grow at historic rates, which would lead to a marked divergence between what providers are paid for treating the commercially insured relative to what they are paid for Medicare beneficiaries. This gap could jeopardize Medicare beneficiaries’ access to mainstream medical care.”
Obamacare also cut $145 billion from Medicare Advantage payment benchmarks. Over one in five Medicare patients are enrolled in the Medicare Advantage plans, which translates to 10.5 million seniors. According to the Medicare actuary many of these seniors will see significant reductions in their Medicare benefits. Additionally, the cuts will cause Medicare Advantage enrollments to decline by 50% by 2017.
Then there is the Independent Payment Advisory Board which empowers 15 bureaucrats to make even more spending cuts. The panels recommendations automatically become law unless Congress override’s by a two-thirds majority vote. Medicare beneficiaries would have no administrative or legal process for challenging the board’s decisions.
Meanwhile, the Ryan plan uses a “premium support” system to help bring in market signals to more of Medicare in much the same way Medicare Advantage and Medicare Part D programs already do.
There is a plan out there that “ends Medicare as we know it.” It is Obamacare.