Republicans are attacking the passage of the Affordable Care Act for its $716 billion in cuts to Medicare, and they’re desperately trying to make it seem like the cuts are to Medicare benefits. Sarah Kliff breaks down those cuts and looks at the policy rationale behind them.
“The majority of the cuts…come from reductions in how much Medicare reimburses hospitals and private health insurance companies… 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. 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.”
“Another big chunk comes from the hospitals. The health law changed how Medicare calculates what they get reimbursed for various services, slightly lowering their rates over time. Hospitals agreed to these cuts because they knew, at the same time, they would likely see an influx of paying patients with the Affordable Care Act’s insurance expansion… The rest of the Affordable Care Act’s Medicare cuts are a lot smaller.”
“It’s worth noting that there’s one area these cuts don’t touch: Medicare benefits.”
And that is where the Paul Ryan / Romney plan and the President’s budget part ways. Romney-Ryan (if Romney agrees with Ryan’s plan today, who knows?) would cut benefits by implementing a voucher system, meaning seniors would need to shop the innovation of the free market to find their own private insurance. That sounds like an exciting adventure, doesn’t it?
Michael Waldholz explains the reality-based issue with that plan:
“The problem is that its just as likely insurers will cherry pick only the healthiest folks. The sickest folks who generate Medicare’s main costs will stay in the traditional plan, meaning the government won’t be able to spread its responsibility over a large enough pool to keep spending down. In other words, nothing will have changed unless the vouchers are priced high enough for insurers to make a profit. I don’t see the savings there.”
That’s exactly the problem with our current health care system, which the ACA’s implementation seeks to begin to fix. By the way, where are Mitt Romney’s tax returns?