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Obamacare in the Senate: Cutting Medicare

Posted By Kathryn Nix On December 7, 2009 @ 9:56 am In Obamacare | Comments Disabled

Last week’s consideration of amendments to Obamacare focused on Medicare, which is used as one of the main sources of funding for the expansion of Medicaid and the establishment of a new health care entitlement under Majority Leader Harry Reid’s (D-NV) bill.

The McCain Amendment. Senator John McCain (R-AZ) offered an amendment to recommit and require the Senate Finance Committee to revise Sen. Reid’s health care bill to exclude all spending cuts to Medicare. Senate Democrats include nearly $500 billion in Medicare cuts to pay for the legislation. Sen. McCain said that simply cutting the funding of one entitlement program to create another federal entitlement program would not constitute reform. Instead, hundreds of billions of dollars in new spending will be added to the federal deficit.

With an estimated $60 billion [1] lost each year to fraud, waste, and abuse, Medicare needs reform. But the Congressional Budget Office’s score [2] of the Patient Protection and Affordable Care Act shows minuscule savings from eliminating or reducing fraud, waste, or abuse in the bill. Senator Tom Coburn (R-OK) noted: “We could cover everybody in the country or extend the life of Medicare 20 years by eliminating the fraud that’s in Medicare today. What are we going to do? We’re not. We’re going to create more government programs and more agencies that are going to be designed to be defrauded.” Sen. McCain’s Medicare amendment was defeated by a vote of 42-58.

The Bennett Amendment. Meanwhile, Senator Michael Bennett (D-CO) offered an amendment that would prohibit any reduction in the guaranteed benefits of Medicare enrollees, and would require that savings in Medicare that result from the legislation would increase Medicare solvency, lower premiums, expand benefits, and improve access to providers.

But Senator Chuck Grassley (R-IA) and others pointed out that the Bennett amendment is less than meets the eye: “ the concern on our side…is that it does not require that the savings from Medicare would only — with emphasis upon the word only — be used for that purpose.” In other words, savings in Medicare would still be used to fund a new federal health entitlement.

In any case, promised cuts to Medicare rarely materialize, because they are often restored after they are enacted in the next legislative cycle. In the case of the Senate bill, the cuts would come from reductions in payments to Medicare Advantage and health care providers such as hospitals, hospices, and nursing homes. While the benefits may be formally guaranteed – thus remain on the books- by the Bennett Amendment, it is the effective reduction in Medicare reimbursement that results in reduced access to those benefits. Cuts to medical professionals who deliver services result in less access to those services, regardless of the paper formality of their provision in the Medicare program. In that respect, Senator Bennett’s amendment is either one that would result in real reductions in services for seniors or one that would not result in real savings and thus be effectively meaningless. Nonetheless, the Bennett Amendment was unanimously agreed to by the Senate.

Kathryn Nix currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm [3]


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URL to article: http://blog.heritage.org/2009/12/07/obamacare-in-the-senate-cutting-medicare/

URLs in this post:

[1] $60 billion: http://www.cbsnews.com/video/watch/?id=5419844n&tag=related;photovideo

[2] Congressional Budget Office’s score: http://www.cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf

[3] http://www.heritage.org/about/departments/ylp.cfm: http://www.heritage.org/about/departments/ylp.cfm

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