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  • Massive Medicare Advantage Cuts

    President Barack Obama has repeatedly said, “If you like your health plan, you can keep it.” But is that true?

    Most likely not, if your plan is a Medicare Advantage (MA) plan. MA is the “private option” within Medicare in which private health insurers are paid a fixed monthly fee to provide health benefits to their enrollees. They must provide at least the same minimum benefits as traditional fee-for-service (FFS) Medicare, but most MA plans provide more benefits, often with lower co-pays and deductibles, and some provide a rebate of the normal Medicare Part B premium. Medicare beneficiaries may select any MA plan offered in their area, and about 24 percent take advantage of this option. Applicants for MA cannot be rejected, and they pay the same premium regardless of their age, sex, or pre-existing conditions.

    One might think that MA is the exactly kind of program that proponents of reform would want to expand. But instead, the new health law cuts it sharply. According to the Office of the Actuary at the Centers for Medicare and Medicaid Services, the MA cuts in the Patient Protection and Affordable Care Act (PPACA) will reduce enrollment in MA plans from 14.8 million to just 7.4 million by 2017. And for those beneficiaries who remain in MA after the cuts, the benefits covered by MA plans will be much less generous than they are now.

    MA plans submit “bids” for the monthly amounts they will charge for a standard patient. (Adjustments are made based on the patient’s health status.) The bid is then compared to a “benchmark” amount, which is determined individually for each county in the country. If the bid is less than the benchmark, the “savings” are shared—25 percent to the government and 75 percent to the patient in the form of better benefits compared to standard Medicare, lower co-pays, or rebates of the patient’s Medicare Part B premium. If the bid for an MA plan is higher than the benchmark, patients who choose that plan pay the difference.

    PPACA changes the formula for determining MA benchmarks. Under the new formula, the MA benchmark will be a fixed percentage of average FFS spending in a county, with the percentage determined by which “quartile” a county’s FFS spending falls in. Counties with higher FFS spending will have a lower percentage applied to determine their MA benchmarks.

    Our recent study shows that these new benchmarks will be lower in every single county in the U.S. Overall, by 2017 when the new formula is fully phased in, the average beneficiary will face cuts of about $3,700, or 27 percent. But these cuts are not uniform at all—ranging from a low of 15.7 percent to a high of 45.4 percent. (You can see detailed results for all counties here.)

    With these cuts, MA plans will be forced to make significant adjustments, including reductions in what they cover and passing on more costs to patients. Some MA plans will pull out of markets entirely.

    Furthermore, the cuts will hit low-income seniors and the disabled with disproportionate cuts. About 70 percent of the cuts will be imposed on those with incomes below $32,400 a year (in today’s dollars).

    In addition, Hispanics are twice as likely to enroll in MA than the average Medicare beneficiary, and African-Americans 10 percent more likely. Therefore, they will sustain a disproportionate share of the cuts as well.

    The bottom line is clear: If the “reforms” in Medicare Advantage made by the PPACA are allowed to go into effect, they will inevitably and unambiguously restrict senior citizens and the disabled to fewer and worse health care choices, reducing their access to quality health care.

    Co-authored by James C. Capretta.

    Posted in Obamacare [slideshow_deploy]

    20 Responses to Massive Medicare Advantage Cuts

    1. Joe astroturf says:

      Great article , here it comes.

      Please Check out song called teapartiers I can’t hear you at http://www.youtube.com/watch?v=cJfboOindCo

      First Verse

      Doctors are retiring earlier but we’re getting 17000 new IRS

      This is how Obama creates health care jobs I guess

      For 233 years this country’s been God’s blessing.

      Now he’s following Cloward and Piven’s to bankrupt the country I’m guessing

      If Obamacare gives Grandma and Grandpa a scare

      Think how when their rationed and die earlier we’ll save on healthcare

    2. Kevin Habibe, colleg says:

      Wait – i can't get is straight – do you want spending cuts or not? MA servicers gets paid about $1,000 more than non-MA providers for the exact same thing.

      So you are saying, we are not spending enough on health care and we should be spending more? I thought the last 2 years you were screaming about federal spending. Please make up your mind.

    3. GARY A. FOX, CPA CHA says:

      This is very bad news for those wise enough to have enrolled in various Medicare Advantage Plans. These plans have provided FAR better benefits than original Medicare…at a price most can afford. The dental, vision, and hearing benefits…which are NOT covered by original Medicare…have helped MILLIONS of Medicare beneficiaries get care they would not otherwise to have been able to afford. There has been enough fraud, waste, and abuse in Medicare…not considering their own incompetence…to fund Medicare Advantage Plans for many years to come. OBAMACARE needs to be repealed AS SOON AS POSSIBLE !

    4. Billie says:

      Whenever something sounds positive from the president, once investigated then seen ties and red tape and ignorance, unfairness.

      Sure you can keep your insurance until I set measures to make it unaffordable and collapse…

    5. Jacqueline Fennell says:

      I have been receiiving an enormus amout of telemarkeing calls, from a comapany stating thery are Medicare Senio Advantage. The very first call was a non-speaking English person, form India, she wanted to discuss my medical records with me, which I was very suspicious of, and I told her so and I hung up on her. With in less than 3-5 seconds another person called me, I knew that the previous caller and this new caller had been talking"conversing" about me. I told her I only discuss my medical records and or personal medical problems with my private doctor and asked her not to call me again. As I was hanging up this person was so adamant about talking to me. So I called my Health care provider HMO to find out if they were doing a suvery and was told now ann if they were they would fully identify themselves and would give me a callback telephone number and the number would show on my "caller-id". So I asked her did she had any knowledge that these calls had to do with the "Obama Healthcare Reform" that they are trying to pass, I was told by the rep she didn't know. Thank you so much for clearing up my questions of what's really going on which is "Obamaism" destruction of medical healthcare for senior citizens,. a persnon like myself and my husband. *I will be passing this on and telephone all entities of his goverment gronies.

    6. Amerigo M. Cimino, P says:

      First and foremost, reporting any news item, we get a host of acrynoms, it is deafening! Are you paid by the word? I have disconnected my T. V. and cancelled the service, I cannot stand the type of reporting being served to the public.

      Re; Mr. Obama's Health care monstrosity, Mr. Obama's stimulous package, and

      other "transparent" happenings in our Congress. How can you comment? Mr. Obamis an actor emoting tripe! He has made many speeches, and they were and are carbon copies of each other, just different words. I find it impossible to make a definite comment, there is

      never a subject! My only hope? November is coming.

    7. Glenn Stanley, Elon says:

      Beware. All seniors and soon to be seniors need to check out what the AARP is pushing. This organization used to be one that looked after seniors. Not the case anymore. They have an agenda and they are pushing hard.

    8. JUD says:

      Shouldn't a President get jail time for lying to the people? Shouldn't all political office holders get the same?

    9. Richard Kellar India says:

      There are 3 different plans and each have premiums a little higher than the other plan. I thought the Liberals were always worrying about the Children the Seniors getting help but now Obama is trying to get rid of us. The MA plans only help the Seniors. We are true Americans who have work are lives here and we are to suffer for his illegals.

    10. Steven Palmisano says:

      Cuts to a health care program that actually works make no sense! It’s has taken years to develop MAPD programs; educate beneficiaries and health care providers and with a stroke of a pen wipe out of the good work, too bad for us.

    11. Michael B., Phoenix, says:

      Spending cuts can come in many ways such as cutting Fraud, cutting frivolus law suits and I think that you will find that Advantage plans include features such as Silver Sneakers programs and preventative measures that will actually cut claims down in the long run as it will keep people healthier.

      Cuts in benefits do not translate to cuts in cost over the long run, as benefit cuts only lead to people postponing treatment until it gets worse.

    12. Mike Roberts Micanop says:

      One additional thing to think about, when these seniors come off a Medicare Advantage Plan and go back on Original Medicare they will have to make a choice to buy a Medicare Supplement or not. If they choose to buy a Supplement then they are looking at an additional monthly premium of $112.00 up to$ 220.00 per month in addition to the Part B premium which is 110.00 per month for this year. Also the cost of Part D premiums which will be an additional amount of 35.00 per month. If they choose not to purchase a supplement and stay on Original Medicare then they face Part A&B deductables , plus they face the 20% that Medicare dosen't cover of their expenses.Medicare has no out of pocket maximum that can be charged to a person on Original Medicare.

    13. Richard Quinn, Verona, NJ says:

      This is only part of the problem. Millions of seniors (me included) will see their employer based Rx coverage reduced or eliminated because PPACA changes the tax status of the RDS rebate. Many retirees are going to be sent to a Part D Plan or EGWP thus increasing government costs and the costs for retirees as well.

      My blog has much more.


    14. Robert Book Robert A. Book says:

      Response to "Kevin Habibe, college park, md" above: "MA servicers gets paid about $1,000 more than non-MA providers for the exact same thing."

      They are not getting paid "for the exact same thing." Read the linked paper.

      And no, we not are advocating spending more. We are saying that the waste and inefficiency in the Medicare FFS program should not be institutionalized and imposed on Medicare Advantage as well. Basically, they are taking the one part of Medicare that could potentially deliver better health care at lower cost, and cutting it — while expanding the part that delivers worse health care at higher cost.

    15. Bobbie says:

      What kind of people would propose spending cuts on a program detrimental to ones health that people earned and or paid into?

      That's like cutting the police force to start a program to teach Hmong women how to fish!!!… How irresponsible and unconstitutional. How weak this leadership is all around!

    16. Cathy, New Freedom, says:

      When Obama and the Democrats were shoving this down our throats, I knew what was going to happen to the MA plans. AARP has been trying to get rid of them for years because they don't sell them. The Democrats and AARP are no friends to seniors. If these cuts, along with reimbursements to doctors and hospitals, are allowed to stand, we will have rationing like many of the "socialized" countries. It is time for the seniors to use their voting power on Nov. 2 and throw out all the Democrats who voted for this horrible plan and even the ones who didn't. If we don't get rid of them, they are going to get rid of us. Remember, Congress exempted themselves. We must stand up and show them who's boss.

    17. Erin Cedar Rapids, I says:

      I work in a hospital and have found MA plans to be awful. Many times seniors don't know the limitations of these plans as they are in the fine, fine print. I have worked with seniors needing skilled care and when we work on placing them in a facility we find that the nearest accepted facility to their home is miles and miles away (even though there are closer ones, just not ones in their provider network)! If you aren't sick, the plans are great. However, if you get hospitalized that is when you discover the higher out-of-pocket expenses and issues with finding a provider in your network.

    18. Pingback: Audacity Of Obama

    19. Pingback: ObamaCare is a Bad Bill and Wrong for America | RedState

    20. Sam says:

      If there is a problem with MA, fix it-MEND IT, DON'T END IT! Those of us on MA are now facing the same problem that those on Welfare faced. The Government under Clinton, was to lazy to fixed the problem so they ended welfare. Now, the people are in dire need and there is no help.

      Obama was never for The Public Option or Single Payer. Medicare Advantage is the closes program to provide the kind of care all of us need. I was a Obama supporter but, I do not support his assault on seniors. Now that I know better, I am in favor of eliminating PPACA. Fo;r those of you who feel strongly against Obama putting his hands on MA, it's important that we call, write and e-mail both Obama, Biden and our representative and tell them to keep their hands off our Medicare Advantage Progam. Let's push the Supreme Court to repeal the bill. By the way, I'm a Democrat.

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