Yes, the ACA cuts $716 billion to Medicare — but the ACA’s cuts don’t touch Medicare benefits

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 benefitsSarah 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.”

— Romney’s right: Obamacare cuts Medicare by $716 billion. Here’s how.

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?

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2 thoughts on “Yes, the ACA cuts $716 billion to Medicare — but the ACA’s cuts don’t touch Medicare benefits

  1. I do not know what you people are smoking but if you have ever had a private health insurance policy you know that insurers are all about their profit. Now you can argue that is how it should be but you are out of your mind if you think hospitals and doctors let alone patients will do better with private insurance compared to Medicare. I recently had a bill for more than $90,000 from a hospital stay for about 5 days. No surgery was performed only medications and testing. The hospital received about $12,000 dollars from my insurer. I doubt that they would have fared worse from Medicare if that was in the mix. Medical care costs what it costs. Could it cost less, probably. The real costs are masked by this facade of what doctors and hospitals submit for payment and what actually gets paid. Whether it’s Medicare or private insurance there is a drive to reduce costs. The difference is that private insurers need to make a profit for their investors or more to the point they need to be perceived as being profitable so that investors can invest and drive up their stock price so that they can then sell the stock at a big profit and then pay some paltry amount of capital gains tax for having created nothing tangible.

  2. Pingback: Paul Ryan’s Medicare plan would ‘pave Paradise’ « Medicare Help

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