Obamas Planned Medicare Cuts Cause Distress For Some Democrats
President Barack Obama wants to cut spending on the federal plan for the elderly to fund his health-care overhaul. That includes more than $100 billion from Medicare Advantage, through which the government hires private insurers such as Humana Inc. to deliver enhanced Medicare benefits to 11 million seniors, like reduced co-payments and even gym memberships.
Should Congress scale back the program, “Were not going to be able to say if you like what you have, you can keep it,” said Senator Bob Casey, a Pennsylvania Democrat. “And that basic commitment that a lot of us around here have made will be called into question.”
Obama is seeking hundreds of billions of dollars in Medicare savings to help finance the overhaul of the health-care system, estimated in the Senate to cost $848 billion. The resistance hes getting underscores the difficulty of paying for the plan without increasing the budget deficit, a condition Obama set.
It also threatens to stoke opposition from the elderly, many of whom are already skeptical about Obamas plans, and to reduce earnings for some of the 200 private insurers participating in Medicare Advantage.
Poll Data
A Kaiser Family Foundation poll released last month found that 60 percent of seniors said they would be better off if Congress didnt change the health-care system; 39 percent of those younger than 65 said they prefer the status quo.
Forty-six million seniors receive Medicare benefits either through the traditional program or Medicare Advantage. Studies show the latter costs taxpayers 14 percent more than regular Medicare.
Republicans have said that the elderlys benefits are in jeopardy. Arizona Senator John McCain has proposed an amendment to strip from the bill more than $400 billion in planned reductions to Medicare.
The amendment, scheduled for a vote today, is unlikely to pass in the Democratic-controlled Senate. AARP, a Washington- based group that lobbies for the elderly, endorsed the Medicare cuts as a way to address the programs long-term budget woes.
Still, some Democrats have sought cover, especially on Medicare Advantage. Their dilemma is that insurers use subsidies to provide benefits unavailable through regular Medicare. Such benefits would be halved under the Senate plan, according to the Congressional Budget Office.
Shielded Constituents
Casey says he wants “very comparable” protections for his state, where more than one-third of Medicare beneficiaries participate in Medicare Advantage. “Its the kind of thing that will likely be addressed on the floor,” he said.
Another fight looms between House and Senate Democrats. The House health-care bill contains about $50 billion more in cuts to Medicare Advantage than the Senate. The House plan also would target rural areas for much of the reduction. In the Senate, where Montanas Max Baucus and other lawmakers from rural states wield more influence, Democrats are looking to cities for savings.
The gap in approach “is as wide as on any other issue in the bill,” said Brian Biles, former staff director of the House Ways and Means subcommittee on health.
Programs Creation
Medicare Advantage was created decades ago in hopes that private insurers could deliver Medicare benefits more cheaply. Companies were paid 5 percent less than the traditional programs costs. Insurers, though, wouldnt enter many rural markets at those rates, said Biles.
Beginning in 1997, the then-Republican controlled Congress increased subsidies to lure insurers into rural markets. Iowa Senator Charles Grassley said that before the increases, Medicare Advantage was available in only one of his states 99 counties. Now its in every county.
“To get it in rural America, it took some subsidies,” said Grassley.