The political wars between Democrats and Republicans over Medicare have raged since Medicare’s inception in 1965. Democrats crafted Medicare to become a single payer system administered by the federal government. Republicans, who opposed the original Medicare bill, preferred a plan adminis-tered by private insurance companies using government subsidies.
This debate has come full circle. Last week, Kansas Gov, Sam Brownback signed the “The Health Care Compact” bill to remove Kansas Medicare beneficiaries from the federal Medicare program.
Brownback said, “The Health Care Compact will allow states to restore and protect Medicare for gener-ations to come. Obamacare is the most serious attack on Medicare and seniors since the program’s inception. By cutting $700 billion out of Medicare, President Obama and his allies made a policy statement that ideology is more important than protecting seniors. I oppose any effort at the state level to reduce Medicare benefits of coverage for Kansas seniors.”
Brownback’s statement is misleading and needs further explanation because guaranteed Medicare benefits are not being cut. The cuts deal with funding.
The problem is not losing benefits; the problem is deciding which plan to choose. We now have two Medicare programs competing with each other. One is government Medicare; the other is private and is called Medicare Advantage.
Title III, Part III in Subtitle G of the Affordable Care Act, Pro-tecting and Improving Guaran-teed Medicare Benefits, section 3602 states: “Nothing in the Act shall result in the reduction or elimination of any benefits guaranteed by law to partici-pants in Medicare Advantage plans.”
Part of the federal subsidy funding the Medicare Advantage private program established under the Medicare Prescription Drug Improvement and Modern-ization Act of 2003 is being cut by about $156 billion over the next 10 years because Advantage beneficiaries receive 14 percent more in funding than traditional Medicare beneficiaries receive. The issue is fairness.
In their 2010 report, Medpac commissioners, comprised of nonpartisan watchdog analysts for Medicare, noted: “In 2009, Medicare spent roughly $14 billion more for beneficiaries enrolled in Medicare Advantage plans than it would have spent if they had stayed with traditional Medicare’s fee for service. To support the extra spending, Part B premiums were higher for all Medicare beneficiaries, includ-ing those in traditional Medi-care’s fee for service plans.”
Instead of spending the extra 14 percent of subsidized dollars to improve health care outcomes as noted in the Medpac commis-sioners report, insurance com-panies have used portions of the subsidies for administrative expenses, which increased their profit margins. The Affordable Care Act is requiring private insurance companies to improve the quality of benefits for Medi-care Advantage beneficiaries.
The remaining funding cuts of about $544 billion were made to reduce spending. In 2012, Wis-consin Rep. Paul Ryan’s budget proposal assumed the same overall $700 billion in cuts.
Some important benefits were added under the new legis-lation, the biggest being elimination of the doughnut hole in the Part D prescrip-tion plan by helping those with expensive medi-cations. That will be especially helpful for bene-ficiaries on fixed incomes.
In 2020, Medicare bene-ficiaries who reach the doughnut hole will pay only 25 percent of their drug costs instead of 100 percent under the original Part D program. The bill added some preventative measures that will benefit beneficiaries.
Political ideology in the administration of the Medicare program continues to confuse beneficiaries. Noted Medicare expert Austin Frakt from Boston University summed it up well when he said, “The politics of Medicare is a cruel sport and the taxpayers and beneficiaries receive the hardest blows.”