Free Markets, Free People


Gutting Medicare to pay for ObamaCare

Perhaps you remember the “clever” accounting trick (also known as double counting) that the Democrats used to claim that ObamaCare would save money?

You know, it would cut Medicare by 500 billion (after the election, of course).  You were supposed to believe that was a net cut in spending, remember?  Of course it wasn’t.  It was simply shifting the money to “pay” for other areas of ObamaCare.   There was no “net” savings.

Well the newest projection by the CBO is that it will actually be 716 billion over 10 years (2013 to 2022) and it will essentially gut Medicare.  Of course the old folks will have voted before it goes into effect.

The result of the shift of the funds?  The Foundry has it:

  • A $260 billion payment cut for hospital services.
  • A $39 billion payment cut for skilled nursing services.
  • A $17 billion payment cut for hospice services.
  • A $66 billion payment cut for home health services.
  • A $33 billion payment cut for all other services.
  • A $156 billion cut in payment rates in Medicare Advantage (MA); $156 billion is before considering interactions with other provisions. The House Ways and Means Committee was able to include interactions with other provisions, estimating the cuts to MA to be even higher, coming in at $308 billion.
  • $56 billion in cuts for disproportionate share hospital (DSH) payments.* DSH payments go to hospitals that serve a large number of low-income patients.
  • $114 billion in other provisions pertaining to Medicare, Medicaid, and CHIP* (does not include coverage-related provisions).

*Subtract $25 billion total between DSH payments and other provisions for spending that was cut from Medicaid and CHIP.

The effect will be fairly substantial and should be obvious to even the most staunch ObamaCare supporter:

The impact of these cuts will be detrimental to seniors’ access to care. The Medicare trustees 2012 report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services.

In addition, as MA deteriorates under Obamacare’s cuts, many of those who are enrolled in MA (27 percent of total Medicare beneficiaries) will lose their current health coverage and be forced back into traditional Medicare, where Medicare providers will be subject to further cuts. The Centers for Medicare and Medicaid Services chief actuary predicted in 2010 that enrollment in MA would decrease 50 percent by 2017, when Obamacare’s cuts were estimated at only $145 billion. Now that the cuts have been increased to $156 billion (or possibly $308 billion, as the Ways and Means Committee estimates), MA enrollment will surely decrease even further.

But Obamacare’s raid of Medicare doesn’t stop with cuts; it includes a redirection of tax revenue from the Medicare payroll tax hike in Obamacare. The payroll tax funds Medicare Part A, the trust fund that is projected to become insolvent as soon as 2024. Obamacare increases the tax from 2.9 percent to 3.8 percent, which is projected to cost taxpayers $318 billion from 2013 to 2022. However, for the very first time, Obamacare does not use the tax revenue from the increased Medicare payroll tax to pay for Medicare; the money is used to fund other parts of Obamacare, much like the $716 billion in cuts are.

That in addition to the fact that Medicare still has 37 trillion in unfunded mandates.

Also note the tax increase in the last paragraph (yes, that would be a middle class tax increase) and how the funds will not support the program with the 37 trillion problem. 

Now we can argue all we want about the existence or non-existence of “death panels”, but here we have exactly what was predicted prior to this abortion of a law being passed.  Rationed care (“… cut back services to Medicare patients or close their doors, making it more difficult for seniors to access these services.”) driven by these cost cuts are defacto “death panels”. 

As the Foundry concludes:

With a raid on Medicare of this magnitude, President Obama’s assertion that his new law is protecting seniors and Medicare is astonishing. The truth is that Obamacare does the opposite.

But hey, this is the same President who claims his economic policy is working too.  See previous post for the reality of that claim.

The reason this cut takes place in 2013 is obvious.  If seniors were aware of its impact, you know how they’d vote. 

Whether you do or don’t support Medicare isn’t the point, it’s the bald faced lies that have been put forward claiming something that isn’t at all true.  And now the numbers are out that prove that.

Again, something which should be front and center as a major issue in this political season. 

But it won’t be.

Just watch.

~McQ

Twitter: @McQandO

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5 Responses to Gutting Medicare to pay for ObamaCare

    • Those two initiatives add up to more than $500 billion. So in addition to reducing future Medicare spending, the law also increases Medicare taxes on the wealthy and creates new fees for the health care industry, as well as a few other things, to come up with the needed sums.

      Now, to address the word “stole.” The money was not stolen in any literal sense of the word. Congress passed the law through its normal process, and the cost reductions for Medicare were out in the open during the many weeks that the final law was being negotiated. 

      Bachmann said that, “We know that President Obama stole over $500 billion out of Medicare to switch it over to Obamacare.” There is a small amount of truth in her statement in that future savings from Medicare are planned to offset new costs created by the law. But the law attempts to curtail the rapid growth of future Medicare spending, not cut current funding. Additionally, the money was not “stolen.” Congress reduced spending on a program through its normal legislative process. That kind of rhetoric is deceptive, and it undermines Bachmann’s basic point. We rate her statement Mostly False.
      ———————————————————————
      A “fact” you simpleton, is not quibbling with the polemics of a politician, as in “stole”.
      This is a FACT; ObamaCare is a monstrosity that WILL further work to destroy the American economy and rob individuals of privacy, choice, and quality health care.

    • The comments from Politifact are from a year before the information McQ posted. The new information from the CBO proves that Bachmann was correct. This is exactly what everyone that looked at the ACA expected, but because of the 10 year limit on CBO projections, they were not able to release that at that time. The only part Politifact got correct was that the money didn’t come from last year’s Medicare budget, but Bachmann didn’t claim it did in the first place.

  • I almost want the GOP to leave this alone and the problems happen because the people who supported this- if I hear any complaints someone is gonna get abused

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