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Obama's Faulty Medicare Math And The Cost To Seniors

October 16, 2012

By Avik Roy

One of the primary ways by which President Obama’s health law funded its dramatic increase in government spending was by making significant cuts to Medicare. But Obama insists otherwise.

"ObamaCare actually strengthened Medicare," he told the AARP last week, by using the law’s Medicare cuts "to lower prescription drug costs, and to offer seniors on Medicare new preventive services like cancer screenings and wellness services."

But for every $500 that ObamaCare spends on prescription drugs and preventive services, the law cuts other Medicare spending by $7,500.

Here’s how the math works. According to the Congressional Budget Office’s most recent estimates, over the next 10 years ObamaCare increases net spending on Medicare’s prescription drug program by $48 billion. The law also spends $4 billion over that period on preventive services, for a total of $52 billion in new spending.

Offsetting that new spending is $768 billion in net cuts to other parts of the Medicare program, primarily hospitalization and medical services.

Obama says these $768 billion in cuts make Medicare stronger, and don’t affect its coverage benefits. But that’s not true either: $156 billion of the cuts are taken out of the popular Medicare Advantage program, which more than a quarter of all seniors participate in.

The administration’s own Medicare actuary, Richard Foster, wrote in 2010 that the Affordable Care Act "will thereby result in less generous benefit packages" (emphasis added).

"We estimate that in 2017, when the (Medicare Advantage) provisions will be fully phased in, enrollment in MA plans will be lower by about 50%" than under prior law. According to an analysis from the Heritage Foundation, the average senior enrolled in Medicare Advantage will lose $3,714 in health care services in 2017, with larger losses in future years.

Most of ObamaCare’s cuts to the Medicare program — $415 billion over the next 10 years — come in the form of "updates to fee-for-service payment rates," a euphemism for cuts to the payments Medicare makes to hospitals, nursing homes, doctors and other providers of health care services.

ObamaCare, in effect, forces these health care providers to offer the same "benefits" for much less money, without making any underlying improvements in the efficiency by which those services are delivered.

Again, the result will be less health care access for millions of seniors. Foster estimates that, over the next decade, the cuts will make 15% of hospitals more or less permanently unprofitable.

Original Source:



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