White House cancels Medicare Advantage cuts
posted at 1:21 pm on April 8, 2014 by Bruce McQuain
The White House has once again bowed to screaming Democrats worried about the mid-term elections and this time cancelled cuts to Medicare Advantage. As you recall, these cuts were to be made to pay for ObamaCare:
The Obama administration announced Monday that planned cuts to Medicare Advantage would not go through as anticipated amid election-year opposition from congressional Democrats.
The cuts would have reduced benefits that seniors receive from health plans in the program, which is intended as an alternative to Medicare.
Under cuts planned by the administration, insurers offering the plans were to see their federal payments reduced by 1.9 percent, which likely would have necessitated cuts for customers.
Instead, the administration said the federal payments to insurers will increase next year by .40 percent.
The healthcare law included $200 billion in cuts to Medicare Advantage over 10 years, in part to pay for ObamaCare.
The Centers for Medicaid and Medicare Services (CMS) said that the cuts weren’t necessary because of an “an increase in healthy beneficiaries under Medicare.” That, of course, makes little sense. Medicare is a mandatory insurance program for people 65 and older. How that demographic suddenly got “healthier” remains a mystery, but there you have the “reason” for the decision. Well, that and mid-term elections.
As for cost, someone needs to explain how ObamaCare is to be funded if the mechanisms set in place to pay for it keep getting delayed or cancelled.
When CBO analysts most recently looked at the gross cost of expanding Medicaid and giving subsidies to individuals to purchase insurance through the new exchanges — the bulk of the law’s spending — they came up with slightly more than $2 trillion for 2015 through 2024.
After deducting some offsets from the law — such as penalty payments from employers and individuals due to insurance mandates — CBO estimated the net cost at nearly $1.5 trillion.
The CBO hasn’t done a standalone deficit analysis on Obamacare since 2012, but at that time, its analysts estimated the law would reduce deficits by $109 billion, once all tax increases, cuts to Medicare and other savings are taken into account.
When referring to the “cost” of Obamacare, the fair thing to do is cite the $2 trillion figure — and no, that isn’t just because it’s a higher number. The gross figure represents how much the federal government will have to spend on expanding coverage through Obamacare, at least according to the CBO. If the government weren’t spending $2 trillion on insurance coverage, that’s money that could be going to reducing the deficit, spending more on infrastructure or a host of other theoretical policies.
As mentioned above, that $2 trillion cost had about $500 billion in offsets. But the penalty payments from employers and individuals has been delayed and now the $200 billion in Medicare Advantage cuts/offsets is cancelled, or so says the imperial presidency. That, of course, doesn’t change the cost, it only increases it.
Short term political pandering aimed at winning elections as usual from this administration. Ironically, it has been more effective than the Republicans in dismantling portions of the atrocity known as ObamaCare. So, thanks to the mid-terms, Republicans get one of the cuts they wanted reversed cancelled. Of course they won’t get credit for it – but then that’s the plan isn’t it?
And, this is all likely temporary anyway, even though the White House and Dems won’t spin it as so:
“The changes CMS included in the final rate notice will help mitigate the impact on seniors, but the Medicare Advantage program is still facing a reduction in payment rates next year on top of the 6 percent cut to payments in 2014,” said [AHIP] president Karen Ignagni.
But it will get them through the election cycle, won’t it?