CBO: Medicare cuts mean benefit cuts

What happens when a mythbuster gets exposed as a mythmaker?  Barack Obama has insisted that people who claim that $500 billion in “savings” from Medicare won’t mean any reduction in benefits.  Douglas Elmendorf, director of the Congressional Budget Office, says that simply isn’t true.  The cuts to Medicare Advantage, which comprise one-fifth of those savings, means reduced benefits for the 25% of seniors using the program (via Instapundit):

Congress’ chief budget officer on Tuesday contradicted President Barack Obama’s oft-stated claim that seniors wouldn’t see their Medicare benefits cut under a health care overhaul.

The head of the nonpartisan Congressional Budget Office, Douglas Elmendorf, told senators that seniors in Medicare’s managed care plans could see reduced benefits under a bill in the Finance Committee.

The bill would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.

Elmendorf said the changes “would reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans.”

And Elmendorf wasn’t the only one admitting this on Capitol Hill yesterday.  During the markup session in the Senate, staffer Shawn Bishop testified to the same thing:

SHAWN BISHOP, SENATE FINANCE COMMITTEE PROFESSIONAL STAFF MEMBER: “The $113 billion dollars is a reduction in the extra benefits, the added, additional benefits that Medicare Advantage enrollees have available to them. And those benefits come in the form of vision, dental, reduced hospital deductible. It’s unstatutory, it’s unlawful for any Medicare Advantage plan to reduce the AB covered benefit that they provide. That’s by statute. They have to provide that. They are going to have a reduction in the added benefits that they have in Medicare Advantage. So there’s a reduction in benefits but its additional extra benefits that they have above what they’re entitled to by law on the fee for service side.” (Finance Committee, U.S. Senate, Hearing, 9/22/09)

Only an idiot would conclude that $500 billion in cuts to Medicare over 10 years would mean no reduction in benefits.  We budgeted $413 billion for this year, which makes a $50 billion “savings” target about 12% of its budget.  Obama keeps talking about how efficient Medicare is compared to private health insurance, but how efficient can it be if he can slice 12% out of the budget without affecting benefits?  In comparison, private health insurers spend 96.7% of all income on care and administrative costs, with only a 3.3% average profit margin.

Elmendorf is speaking not just from hard data but also common sense.  Any attempt to get that level of “savings” from Medicare will necessarily cut the benefits going to its recipients. Trying to cast that as a myth is either an indication of mathematical incompetence, political dishonesty, or both.  It’s also worth noting that when previous administrations attempted to cut Medicare spending by much lower amounts, Democrats would scream from the rafters about Republicans trying to steal Medicare away from seniors.  In this case, the CBO confirms that Democrats have engaged in projection.

And what happens in the media when the CBO exposes the President as a mythmaker, not a mythbuster?  Well, it’s like the proverbial tree in the forest.  None of the major newspapers covered the story that ObamaCare means cuts in Medicare benefits.  Not one.

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