WASHINGTON-One of the most politically potent issues for Republicans in the just-finished campaign season was the charge that health reform would slash $500 billion from Medicare–a claim Democrats sharply disputed.
Although the airwaves have gone quiet on this issue, it’s not about to fade away.
As Medicare opens its rolls this week for new beneficiaries to sign up and for current patients to switch plans, both sides are gearing up for a fresh fight over the future of the government health care program for the elderly.
Republicans, who in January will gain control of the House and will wield a stronger hand in the Senate, have not yet detailed all their plans for unraveling the health reform law. But they have made it clear that they will try to overturn key provisions, including the changes to Medicare.
Democrats, meanwhile, find themselves still scrambling to counter the GOP argument that health reform will gut the program, which provides health care to 46 million beneficiaries who also happen to be a key swing voting bloc.
The main point of contention centers on changes to the Medicare Advantage program, under which private insurers deliver Medicare services through managed-care plans. The health reform law aims to reduce the growth of Medicare by approximately $500 billion over ten years, in part by trimming reimbursement payments to insurers that offer Medicare Advantage plans.
Democrats and other critics say the payments for private Medicare plans are far too high–and they amount to subsidies at taxpayers’ expense to insurance giants for health plans that are no better than the government-run Medicare program.
“We have been paying vast amounts of money–about 14 percent more per beneficiary–to receive the same services in a private plan than they can get in traditional Medicare, and I see that as waste,” said Judith Stein, executive director of the Mansfield-based Center for Medicare Advocacy. “This is taxing the long term solvency of the program. It’s not to the advantage of taxpayers … and not to the advantage of Medicare beneficiaries.”
Republicans and their allies, however, say that the cuts will dramatically undermine Medicare’s current offerings and end up costing more money in the long run by reducing private competition to the government program. With lower subsidies, insurers will have to drop their Medicare Advantage plans or decrease benefits, they argue.
Today, Sen. Michael Enzi of Wyoming, the top Republican on the Health, Education, Labor & Pensions Committee, plans to grill the Obama Administration’s top Medicare official about the impact of the cuts on the private Medicare programs.
An aide to Enzi noted that Harvard Pilgrim Health Care, a New England firm, plans to drop its Medicare Advantage plan in the wake of the reform law, forcing seniors to find new Medicare coverage. His staff declined to detail specific proposals Enzi might pursue in the next Congress, but said broadly that he would focus “on legislative solutions that ensure seniors don’t lose access to the health plans they currently have–the plans seniors were promised they could keep.”
“The easiest thing for Congress to do is go back to where we were before, which is bad, but not as bad as where we are now,” said Robert Book, a health care expert at the conservative Heritage Foundation. Book recently conducted a state-by-state analysis of the Medicare cuts’ impact on seniors.
But the path “back” for Republicans could be a politically dicey one. The GOP came into power on a pledge to reduce spending, so restoring billions of dollars to the Medicare Advantage program would be, at best, a tough sell to their conservative supporters.
In the meantime, Democrats are gearing up to aggressively defend the Medicare changes. They point to new data showing very little change in this year’s Medicare Advantage offerings.
With Medicare’s open enrollment period starting Nov. 15 and running through Dec. 31, seven insurers in Connecticut are offering 15 different MA plans, according to data compiled by Stein’s CMA. A few duplicative plans have been eliminated (due to another requirement of health reform for insurers to nix similar plans so seniors would have clearer choices). And the premium range for 2011 Medicare Advantage plans, which top out at $168 a month, is the same as for 2010.
“All the hysteria that we were abolishing Medicare Advantage didn’t materialize,” said Rep. Joe Courtney, D-2nd District. “The system is still very healthy.”
But the health reform law only called for a freeze in Medicare Advantage payments for 2011; the reductions will kick in over the next several years, with full implementation scheduled for 2017. So critics like Book say this year’s data is not indicative of what’s to come.
For example, Book’s analysis predicts that by 2017, when the reductions will be fully phased in, 48 percent of Connecticut seniors will lose access to Medicare Advantage plans. Similarly, a report from the Centers for Medicare and Medicaid Services estimated that nationally, the number of seniors enrolled in MA plans would drop by about 50 percent.
Book said rather than just restoring the Medicare Advantage subsidies, the better route for Congress to take would be to more dramatically revamp Medicare.
He said right now, private insurers are at a competitive disadvantage with the government-run program. That’s because, for example, if Medicare loses money paying out fraudulent claims, that cost is covered by taxpayers. But private insurers have to eat those losses and account for them to shareholders.
To remedy that, lawmakers could allocate more money to pursuing fraud. But “the best solution would be to essentially put everything under Medicare Advantage, or something like it, and then every dollar is subject to someone’s accountability,” Book said.
That’s exactly the solution Stein and others fear. “I’m worried they will pull the wool over the eyes of the American people and put those subsidies back in place, wasting million of dollars and helping private insurance companies,” Stein said of the new Congress. “This is all driven by a desire to privatize Medicare.”
Stein and others scoff at the prediction that Medicare Advantage plans will wither under lower subsidies.
“My guess is over the long term we will see some of the smaller entities drop out, but you won’t see United Healthcare, Humana and the like doing that,” Stein said. “And if we lose plans to the market because they don’t like being paid 14 percent more than [the cost of the services through Medicare], so be it.”