Morning Bell: Obamacare’s Negative Impact on Seniors
by Alyene Senger, Heritage Foundation, June 3, 2013
The Medicare program that provides health insurance to seniors faces a dire financial future. And Obamacare is making it worse.
Medicare’s Part A trust fund is projected to be insolvent by 2026 and the total program has a long-term unfunded obligation of more than $35 trillion. This means the government has made $35 trillion worth of benefit promises to current and future seniors that are not yet paid for — a staggering amount that is more than double the nation’s total current debt.
Despite the fact that the Medicare trustees have been warning of this financing disaster for many years, President Obama’s massive health care law makes the matter much worse, not better.
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Ignore the political rhetoric of keeping Medicare “as we know it.” Obamacare has already made significant changes to Medicare, namely through provider reimbursement reductions and the creation of an unelected board of bureaucrats, the Independent Payment Advisory Board (IPAB).
Here are three examples of Obamacare’s impact:
1) Huge payment reductions that reduce access to care. According to the Congressional Budget Office (CBO), Obamacare will reduce Medicare reimbursements by $716 billion over 10 years. These cuts will hit Part A providers such as hospitals, nursing homes, skilled nursing facilities, and hospices, along with Medicare Advantage plans. The trustees predict that if Congress allows these cuts to go into effect, 15 percent of Medicare providers would go in the red by 2019, 25 percent by 2030, and 40 percent by 2050.
This will absolutely impact seniors’ ability to access medical care. As the trustees explain: “Providers could not sustain continuing negative margins and would have to withdraw from serving Medicare beneficiaries or (if total facility margins remained positive) shift substantial portions of Medicare costs to their non-Medicare, non-Medicaid payers.” (Emphasis added.)
2) Medicare “savings” are spent on other parts of Obamacare. Obamacare’s Medicare “savings” and increased Medicare payroll tax are often touted as increasing the solvency of the Part A trust fund, but that simply is not true. The money is counted as paying for new entitlement spending in Obamacare.
As CBO plainly states, “CBO has been asked whether the reductions in projected Part A outlays and increases in projected [hospital insurance] revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. Our answer is basically no.”
3) The ominous and looming power of IPAB. The board will consist of 15 unelected and unaccountable bureaucrats, charged with meeting a newly created budget target in Medicare. When Medicare spending surpasses the target, IPAB will have to make recommendations to lower Medicare spending. The trustees project the much-hated IPAB will need to step up and make recommendations for the first time in 2016.
Obama’s Medicare agenda falls far short of what is necessary to put the program on a sustainable path, and his law’s negative impact on seniors is yet another reason the law must be repealed in its entirety before its most egregious provisions (Medicaid expansion and exchange subsidies) begin in 2014.