Saturday, August 18, 2012

Campaign Focus Turns To 'Medicare'

12:32 PM

For the past few days, media attention regarding the United States presidential election has turned from the economy and jobs, to Medicare, the government funded health care system for retirees. With both candidates attacking the records of their opponent, and me viewing Medicare as a serious issue, I was curious as to who will protect the program.

We can make the assumption that since Obama is a democrat and Romney is a republican, that Obama would be the obvious choice. Democrats have a long history of increasing funding of most social programs, and Republicans have long attacked programs such as Social Security, Government Health care and Social Welfare. But with an ever changing political landscape, and Romney's recent decision picking Rep. Paul Ryan as a running mate, I think we better look at statements, voting records and stances on the issue.

The main reason I don't want to assume President Obama is the favorite among retirees regarding Medicare, is because of the "Affordable Health care Act" aka "Obamacare". I wasn't too sure on how this would affect the Medicare system, so I searched every corner of the Internet and I found out some pretty interesting stuff that voters on both sides should know. Under the "Affordable Health care Act" Medicare will sustain about 700 billion in cuts. Though it seems that those cuts are being re-invested in the health care system. The President has recently been attacking the Romney ticket over Rep. Paul Ryan's proposed Medicare overhaul. "Mr. Romney and his running mate might have a different plan" Obama said. "They want to turn Medicare into a voucher program. That means seniors would not have the guarantee of Medicare". Obama went on to say that Romney's plan for the program would force seniors to pay as much as $6,400 for health care costs per year. Now if Obama is making 700 billion dollars in Medicare cuts, where is he making said cuts? Most of them seem to be concentrated in two areas. First he proposes cutting "Medicare Advantage", which according to its own website "A Medicare Advantage program (like a HMO or PPO) is another Medicare health plan you may have as part of Medicare." This might not be a problem except roughly 11.5 million or 25% of Medicare beneficiaries participate in the program. Allies of Obama's Medicare plan say that Medicare Advantage is too costly, as the government is subsidizing private insurers, and that Obamacare is simply cutting payments. The problem with this is, if you look at the Medicare Advantage website (linked earlier), the reason the program costs more is because beneficiaries receive more benefits. If the government makes cuts to this, providers will have no choice but to cut benefits. You can see how 11.5 million people would be against that, and in a swing state, that is a whole lotta votes!

The next set of cuts under Obama's Medicare reform is geared toward health care providers, such as hospitals and nursing agencies. This is where the allies of his Medicare policy get a tad circular in their reasoning. They say that recipients won't have their benefits cut because under Obamacare, nearly 30 million Americans will be newly insured, and the providers will make up the difference in profit there. But this is a fallacy, and an obvious one at that. If providers are going to be making their profit off of the newly insured under Obamacare instead of Medicare, wouldn't they just focus their services to those insured under Obamacare, Hell I wouldn't doubt that most of the providers would withdraw from Medicare completely. Essentially Medicare beneficiaries have the same benefits on paper but not in practice. According to the 2012 Center for Medicare and Medicaid Services trustees report, it is predicted by Richard Foster, the chief actuary for CMS "Without unprecedented changes in health care delivery systems and payment mechanisms, prices paid by Medicare for health services are very likely to fall increasingly short of the costs providing these services. By the end of the long range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicare prices, which have already led to access problems for Medicaid enrollees and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result." The main problem Obama runs into with this is where the cuts go, and the financing of the program (Medicare). Well we already have established that the cuts will go to help fund Obamacare, but he claims that it will also help extend the life of Medicare. Again that is a tad circular. You cannot simultaneously cut Medicare to fund Obamacare while still helping Medicare without running a deficit equal to those cuts (700 billion). As the Congressional Budget Office has put it, " To describe the full amount of (Medicare Health Insurance) trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position." Basically he cannot cut Medicare to fund Obamacare while also improving Medicare without running a deficit, which is the exact opposite of what anybody wants right now. It seems like something they should hammer out soon, especially if he wants to grab swing-states with a large retiree population such as my state of Florida, Pennsylvania and Iowa.

But what about Romney and Ryan? After all Ryan's "Path to Prosperity" budget plan, extends those same cuts to Medicare. In a nutshell what I get from reading the Romney tickets statements, and Rep. Ryan's budget proposals, is that they want to turn Medicare into a voucher system, and I don't see that working well. Basically the government will give beneficiaries money (vouchers) that will cover only part of their health care costs. As the Kaiser Family Foundation put it, "These proposals would each convert Medicare from a defined benefit program, in which beneficiaries are guaranteed coverage for a fixed set of benefits. To a defined contribution or "premium support" program, in which beneficiaries are provided a fixed federal payment to help cover their health care expenses." To me that doesn't sound too good. I don't like the idea of a fixed federal payment in a health care system that is bonkers with inflation.

I think Obama is the winner here. I think that Obama can iron out the details on his Medicare policy. Whereas Paul Ryan has already laid it out twice in Congressional budget proposals. I don't think many Americans would mind running a deficit (if they can lower the 700 bil. number), so long as the program actually works. If I was Obama, I would make the cuts to Medicare Advantage, but not to the providers. You'll get slightly lower than the 700 billion number. We would still run a deficit on this, but seniors would still get their guaranteed coverage from Medicare, and providers would enjoy unchanged funding, an influx of new patients under Obamacare and returning patients under Medicare. I never even addressed that Ryan's budget proposal hurt 44 million Americans insured under Medicaid (Medicare for children and the seriously ill). Either way, this is exactly why I wish for the days of socialized medicine similar to Canada, England and France. Then we wouldn't have to worry about retirees getting their medicine and what is getting cut from where, because it is one large, functioning, national program that insures everybody. But we will leave the socialized medicine debate for another time.

Sean Rankin
Chief Blogger
The New Skeptic


  1. Thank you. I will be doing a piece on the lesser known candidates such as Jill Stein and Ron Paul within the next week. Subscribe via email, or go to our FB page for updates.

  2. As I understand it, Obamacare pays for actually curing a problem and for preventative medicine, but not for prolonged treatment with no measurable cure rate. I also understand that the $700 billion is cutting the pork from the program that has historically been used to pad the paychecks of insurance upper management. Our Healthcare system is driven by the Pharmaceutical business. There is no incentive to cure, but only to treat with drugs. There is no incentive to successfully keep people from getting ill to begin with. Obamacare begins to address that. If Republicans had not blocked more, Obamacare would have addressed much, much more.