President Obama and his campaign officials have offered a series of defenses for the roughly $700 billion in Medicare cuts he enacted to help finance his $1.7 trillion Obamacare program. To summarize, they have argued that 1) the cuts only deal with overpayments to private insurers and providers, 2) they dont affect benefits, and 3) the cuts extend the solvency of Medicare. Not one of these claims holds up under scrutiny.
Its true that a lot of the cuts in the health care law come out of Medicare Advantage, which is the part of Medicare that allows beneficiaries to buy into privately administered health care plans. Obama and his defenders speak as if Medicare Advantage isnt part of Medicare, but, as the official website states, A Medicare Advantage Plan (like an HMO or PPO) is another Medicare health plan choice you may have as part of Medicare. Last year, 11.5 million Americans, or about a quarter of all Medicare beneficiaries, were enrolled in a Medicare Advantage plan, according to the Kaiser Family Foundation.
Democrats argue that the program is too costly because the government is subsidizing private insurers, and all Obamacare is doing is cutting overpayments. But in many cases, the reason Medicare Advantage plans are more expensive is that they offer more generous benefits than traditional Medicare. When the government reduces payments, enrollees will receive fewer benefits.
The other cuts Obamacare makes is to health care providers such as hospitals and nursing facilities. Obama and his allies insist these cuts wont affect benefits for Medicare participants and that providers will enjoy a flood of new customers, because Obamacare expands health insurance coverage by about 30 million. But it isnt as if one set of changes offsets the other. If the government slashes payment rates, and providers are losing money on Medicare patients, a lot of providers are simply going to leave the program and focus on other patients.
In other words, seniors may have the same coverage on paper under Obamacare, but in practice theyll have less access to health care services. And you dont have to take our word for it. In the 2012 trustees report for the program, Richard Foster, the chief actuary at the Centers for Medicare & Medicaid Services, predicted: Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory and many other services would be less than half of their level under the prior law.
Foster added, Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.
This editorial page has long emphasized the need to reform Medicare. We dont believe the program is untouchable. But Obama and his fellow Democrats are basing their campaign around the idea that they will protect Medicare from Mitt Romney and Rep. Paul Ryan, R- Wis., who want to gut it. The facts on record, however, completely undermine and reverse Obamas fabulistic narrative.