On the stump, Candidate Obama identified government entitlement spending on Medicare, Medicaid, and Social Security as the largest contributor to the federal deficit. If Congress doesn’t rein in the costs of these programs, he said,, these three programs will “consume all of the federal budget.”
Candidate Obama was right. (Still is: just check out The Heritage Foundation’s new 2010 Budget Chart Book.) Unfortunately, the President’s health care law will only exacerbate the entitlement crisis.
While Obamacare seeks some cost-savings (witness its ham-fisted treatment of popular Medicare Advantage plans), it does nothing to reform the overall structure of the Medicare entitlement. While the new law carves out $529 billion in Medicare “savings,” it calls for using those funds—and trillions more—to bankroll even more expansive health care entitlements. According to the National Center for Policy Analysis : “Instead of fixing the health care programs for seniors and those who cannot afford insurance, this law cuts Medicare and adds more people to the failing Medicaid system.”
Many seniors enrolled in Medicare Advantage will not be able to keep the plans they know and like. A poll by America’s Health Insurance Plans found that 88% of Medicare Advantage enrollees are satisfied with their coverage. No surprise. The Centers for Medicare and Medicaid Services reports that Medicare Advantage lowers costs and creates substantial savings.
Florida alone is home to more than 3 million Medicare Advantage enrollees. The National Center for Policy Analysis reports that more than 985,000 of these face having their benefits reduced, with an estimated 33-64% decrease in Medicare Advantage enrollment.
Medicare and Medicare Advantage both should undergo reform, but Congress should start over and do it right. Heritage’s James Capretta and Robert Book write that “The ideal outcome of any Medicare Advantage reform would be a wide variety of choices for seniors, ranging from plans with baseline benefits and lower patient costs to those with more comprehensive benefits, perhaps with supplemental payments. The way to get there is with a true competitive marketplace in which all plans bid for services, including the FFS program. With true competition, an MA plan can innovate and cut costs to gain a competitive advantage relative to FFS and thus attract enrollment.”
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Vivek Rajasekhar 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/Internships-Young-Leaders/The-Heritage-Foundation-Internship-Program
