Health and Human Services Secretary Kathleen Sebelius has emerged as the person to watch as the Obama administration scrambles to implement health reform. The health care czarina’s words and silences offer clues about the way health reform will play out for millions of Americans. The rules, the regulations, and the compromises with health care stakeholders will determine the ultimate value of the reforms. What Sebelius said during the long reform debate usually signaled what was likely to happen; when she equivocated early on about the public plan, we knew Obama was prepared to junk that option. Campaign Desk will be watching what the secretary says, with an eye toward encouraging the press to do the same. The entire series is archived here.
Seniors can be forgiven if they are super confused about what’s happening with their Medicare benefits. The administration and the press have not exactly been clear in explaining reality to a group of people who never really understood how Medicare worked in the first place. The full story of what happened to Medicare Advantage (MA) has yet to sink in.
Recall that the health reform law whacked $132 billion from the Medicare Advantage program over the next ten years to help fund subsidies for the uninsured—a proposal strongly backed by the president during the campaign and in last year’s reform debate. The government has been overpaying insurers for these plans relative to what it pays for traditional Medicare benefits, and the extra money has allowed MA plans to offer seniors all kinds of goodies in addition to the basic Medicare benefits—gym memberships, eyeglasses, dental services, and reduced cost sharing, for example. Seniors have flocked to these plans and are not eager to give them up. Nor do they want to give up the cheaper monthly premiums many of them offer. Some MA plans charge no premiums at all.
More than fourteen million seniors have signed up for MA plans, and it’s a good bet that these people will be upset about the cuts—even though some MA plans come with hidden copayments and other charges that result in very high out-of-pocket costs if their users are unlucky enough to get sick. Many have been willing to take that gamble.
But with the gravy train coming to a halt, Medicare’s chief actuary, Rick Foster, predicts that the number of seniors in MA plans will drop to about 7.4 million over the next few years as sellers begin to cut back benefits and raise premiums in response to shrinking government payments. The new law, says Foster, “will generally reduce Medicare Advantage rebates to plans and result in less generous benefit packages.”
Does the administration want seniors to join these plans, or not? On the one hand, the administration wants to knock the stuffing out of Medicare Advantage; on the other, it is encouraging people to stay in MA plans by being less than honest about what will happen to the extra benefits. It’s like officials fear a popular revolt if seniors really understand the ins and outs of what’s happening.
A few weeks ago, Madame Secretary sent every Medicare beneficiary a four-page brochure which told seniors that “Your guaranteed Medicare benefits won’t change—whether you get them through Original Medicare or a Medicare Advantage plan.” And this week, in his sales pitch for the new health law, the president himself drove home the point that seniors won’t lose their Medicare benefits. “What you need to know is that the guaranteed Medicare benefits that you’ve earned will not change, regardless of whether you receive them through Medicare or Medicare Advantage,” Obama told seniors who had come to hear him speak at a town hall meeting in Maryland.
Note the emphasis on “guaranteed Medicare benefits.” The administration’s talking points don’t reveal that the extra benefits are on the chopping block. Perhaps it’s banking on the fact that seniors rarely distinguish between what’s a guaranteed benefit, like hospital and physician services, and goodies that are not, like Silver Sneaker memberships. To most, a benefit is a benefit, and many can’t tell the difference between an MA plan and getting traditional benefits from the government along with a Medigap policy.