'Mediscare' Tactics

Published Aug 19, 2012. By Jerry Zremski.


WASHINGTON - Mitt Romney, echoing concerns expressed for months by Republican congressional candidate Chris Collins, says millions of seniors will "lose their coverage" thanks to President Obama's cuts in funding for the popular Medicare Advantage program.

That's not true. Some seniors may change insurers because of those cuts , but they won't lose their coverage.

Meanwhile, Obama reprises a refrain from Rep. Kathleen C. Hochul's campaign, saying the budget plan put forth by GOP vice presidential hopeful Paul Ryan will "end Medicare as we know it."

But that's not true, either - at least not any more. Traditional Medicare would continue as an option under Ryan's revised health care plan.

There is a hard truth, though, underlying all the rhetoric.

Medicare is going broke.

And something - reduced benefits or payments to medical providers, higher premiums, increased competition, something - will have to be done if we don't want the nation's health care program for the elderly to bankrupt the nation in the coming decades.

Yet with both parties engaging in "Mediscare" tactics, policy experts worry that the next president, the next Congress and the public will be unprepared to face that hard truth.

"It's a very destructive debate," said Robert Bixby, executive director of the Concord Coalition, a budget watchdog group.

That being the case, deconstructing the destructive debate might be a good start.

If you're a senior shopping for health insurance, you can:

A) Opt for traditional Medicare, which will leave you paying up to 20 percent of your health costs unless you get supplemental insurance, or;

B) Enter a Medicare Advantage plan that, for a monthly fee and a co-pay when you go to the doctor, gives you everything traditional Medicare gives you, along with vision care, dental care and a gym membership.

Not surprisingly, 54 percent of Erie County's seniors have picked option B. And Republican Collins has been telling them that the Obama health law - which his opponent, Hochul, reluctantly backs - will "effectively end Medicare Advantage as our seniors have come to depend on it."

Well, that's not what local insurers say.

"We will be working with what the government tells us and what it gives us in terms of provider payments to provide the best coverage we can within the rules that are set up," said Nora McGuire, senior vice president for marketing at Independent Health.

"We continue to monitor and watch to track the changes, but obviously our goal is to minimize any impact to beneficiaries and to continue to offer innovative products," said Donald Ingalls, vice president of governmental affairs at BlueCross BlueShield of Western New York.

It's true that the Obama plan includes a $716 billion cut to projected Medicare spending over 10 years. Most of the savings come from lower payments to medical providers, and $156 billion of it comes from lower subsidies for Medicare Advantage.

But there's a good reason for that cut.

Medicare Advantage will cost about 7 percent more than traditional Medicare this year, according to a report by the Medicare Payment Advisory Commission. And earlier studies have shown the cost gap between the two programs to run as high as 20 percent.

That's because the subsidies that insurers get for offering Medicare Advantage plans are "enormous," the American Medical Association said in an analysis of the program that backed cutting them.

Then again, such cuts could make the plan less attractive to insurers and to seniors.

That's why the trustees who oversee Medicare said that because of the changes, they expect enrollment in Medicare Advantage to fall from 27 percent of seniors nationwide today to about 17 percent in 2020.

Collins is more pessimistic.

"Changes will occur," he said. "There will be an increase in premiums or changes in benefits. That will end Medicare Advantage as we know it."

But the changes are expected to occur primarily in parts of the country where for-profit insurers run the most expensive Medicare Advantage plans.

Local insurers - which are nonprofit - don't seem worried.

"There has not been a year since 1998 when the feds have not made a change," said Julie R. Snyder, director of corporate relations at BlueCross BlueShield. "We've never dropped a program. We've never gotten out of the business."

'Ending Medicare'

If you watched Obama on the news last week, you might have seen him speaking to a crowd in Dubuque, Iowa, and lacing into the Romney-Ryan ticket for its plans for senior health care.

"Their plan would end Medicare as we know it," he said.

If it all sounds familiar, of course, it's because Hochul, D-Hamburg, relied on various versions of that line to win election to the House last year.

And just last week, her campaign manager, Frank Thomas, once again said the Romney-Ryan plan "ends Medicare as we know it."

Except it doesn't.

Traditional Medicare would continue under the latest version of the Ryan plan, though it would face more competition from private insurers.

Fact-checkers have been up in arms about the purported "end of Medicare" for a while.

Some Democrats have gone further than Hochul and said: "Republicans voted to end Medicare." PolitiFact.com, the Pulitzer Prize-winning fact-checking website, in December listed that as its "lie of the year."

While liberals erupted over that designation, other fact-checkers concurred.

Under the plan Ryan offered in 2011, "Medicare would remain an entitlement program, but it would also be more costly to future beneficiaries," said FactCheck.org, a project of the Annenberg Public Policy Center at the University of Pennsylvania. "It would not end."

It would, however, change dramatically for those under 55.

No longer would Medicare guarantee seniors a defined set of benefits at a set cost. Instead, the government would give seniors a subsidy - projected to shrink over time in comparison to health costs - with which they would have to buy their own health insurance.

Seniors would pay thousands more for health care under the Ryan plan - but not until it took full effect in a decade. The nonpartisan Congressional Budget Office said his initial plan would leave future seniors paying 68 percent of their health care costs, up from 25 percent under current law.

Beset with criticism over that fact, Ryan this year modified his plan, preserving the current government-run Medicare program in competition with private plans. Future seniors would shop for their coverage on a new insurance "exchange."

In other words, "Ryan's new plan looks a lot like Obamacare for those over 65, except with a public option," Bixby, of the Concord Coalition, wryly noted.

But does it "end Medicare as we know it?"

Hochul insists it does.

The new Ryan proposal "would create a two-tiered system for the haves and the have-nots," with poor seniors flocking to cheaper plans and not receiving the defined set of benefits that Medicare recipients have enjoyed for decades, Hochul said. "I don't understand how you can say it doesn't end Medicare as we know it."

Not quite, say the experts.

The "as we know it" qualifier might have made the Democratic argument closer to true, but that would have been before Ryan amended his plan to keep traditional Medicare as an option, said Jason Peuquet, research director for the nonpartisan Committee for a Responsible Federal Budget.

In any case, either Ryan's plan "certainly transforms the structure of Medicare as it's been," Peuquet added.

Saving Medicare?

Some sort of transformation is needed, Medicare experts agree, for one awful reason.

The trustees who oversee the program say the Medicare trust fund that covers the program's hospital costs is due to run out of money in 2024.

"Medicare, in its current form, is not sustainable," said Steve Bell, senior director of economic policy at the Bipartisan Policy Center. If current policy is not changed, "there will come a time ... when the Medicare trust fund is not able to pay all the bills beneficiaries accumulate on time and in full."

What's more, the Romney-Ryan proposal to eliminate the Obama health care law's Medicare cuts will only make matters worse. Without those cuts, the Medicare trustees said, the trust fund will be insolvent in 2016 - eight years sooner than under current law.

"If you are going to restore [Obama's cuts], then what it's going to do is complicate the financial condition of Medicare," former U.S. Comptroller General David Walker, who now heads a deficit watchdog group called the Comeback America Initiative, told the Associated Press.

And Medicare's financial condition is already plenty complicated.

Bixby said the growth of Medicare is the biggest fiscal challenge facing the country. With thousands of baby boomers joining the Medicare rolls every day and medical costs increasing far faster than inflation, he warned that if the nation doesn't do something more - and soon - to control Medicare costs, an economic crisis could result.

He and other experts said there are plenty of elements to a possible solution: reduced benefits, higher taxes, raising the retirement age - as Ryan has suggested - and increased private-sector competition.

The trouble is, the politicians have demonized all the solutions. Fiscal hawks say that will make it more difficult for the public to ever face the fact the politicians won't tell you.

"Medicare as we know it ... is going to be ending," Bell said. "The question is: What do we do about it?"