As for benefit reductions for the 850,000 Pennsylvania seniors—that, too, is tricky. That’s the number of Pennsylvanians who have MA plans, and the truth is that some may well see a benefit cut in the optional benefits those plans offer. (Medicare Advantage plans are a type of coverage that provide all the government required benefits, and lots of extras like gym memberships and vision care for about one-quarter of all beneficiaries.) The AP reported that the law “did not cut benefits guaranteed under traditional Medicare.” But Medicare Advantage is a slippery slope, and beneficiaries don’t distinguish between benefits provided under traditional Medicare and the popular extras.
The Denver Post’s political polygraph took on MA plans, but muddied the point. First it said that the Centers for Medicare and Medicaid Services “has assured seniors who paid extra to participate in the privately-managed Medicare Advantage plans that they will not see their benefits reduced.” That left me confused. In general, seniors pay lower premiums to participate in these plans. That’s why they are so popular. In the next graph, if readers got that far, the paper reports that the health reform law does reduce overpayments, but MA plan members will still get guaranteed Medicare benefits, which are not defined. They should be.
To beneficiaries, a cut is a cut, and administration spokespeople along with health reform advocates have downplayed the looming cuts to Medicare Advantage plans, which seniors will start to feel in the next few years, a point The Washington Post made in its examination of the misleading claims. A letter sent in early October from Medicare’s chief actuary, Richard Foster, to Iowa Republican senator Charles Grassley explains that the reduction in government payments to sellers of Medicare Advantage plans will indeed result in “significant increases” in out-of-pocket costs beginning in 2011, and those increases could be as much as $873 in 2019.
For reporters taking a look at your local ads in the next two days—and we hope you do—here are the facts:
The health reform law cuts the growth in Medicare spending by $533 billlion. (Some like to call that a savings because Medicare might not be spending as much as it otherwise would, but the term can be confusing.) But it also adds $105 billion in new spending for more coverage for seniors who have very high drug expenses, and the elimination of copayments for preventive services. The net reduction in Medicare spending is $428 billion over ten years.
About 40 percent of those cuts come from payment reductions to hospitals, nursing homes, home health agencies, and other providers, except doctors. Congress will deal with payments to doctors separately. That money will be used to subsidize insurance policies for the uninsured. Another twenty five percent comes from reductions in the overpayments to Medicare Advantage plans. In 2010, the government has been paying insurers nine percent more on average to provide the same benefits it pays to care for beneficiaries in the traditional Medicare program. “Eliminating the overpayments helps prolong the life of the Medicare trust fund,” says Tricia Newman, vice president of the Kaiser Family Foundation.
Phasing out the overpayments will also hold down the increases in Part B premiums, which all beneficiaries pay to help cover the costs of doctor, lab, and hospital outpatient services. While cuts to MA plans may be unpopular with those who have them, cutting the overpayments sense does strengthen Medicare for everyone at a time when the program faces significant financial challenges.
Most people, especially those on Medicare, have never really understood how the program works. That’s made it easier for each side to get away with advertising flim-flam. Right after the election as Medicare’s open enrollment begins, it would be great if all those media outlets that have dissected campaign ads start telling their readers what the advertising missed, which I discuss in the accompanying post.