Free Markets, Free People
No, Seniors, You Won’t Be Able To Keep Your Health Insurance Plan
Throw this on the pile with the many
lies broken promises from Obama about his health care initiative. It’s official now that a Democrat is saying it:
Democrats, having defeated a Republican attempt to block proposed Medicare cuts, now face an even bigger headache: concern among members of their own party over the program’s future funding.
President Barack Obama wants to cut spending on the federal insurance plan for the elderly to help fund his health-care overhaul. Part of that proposal would cut more than $100 billion from Medicare Advantage, through which the government hires private insurers such as Humana Inc. to deliver Medicare benefits to 11 million seniors, including extras like reduced co-payments and even gym memberships.
Should Congress scale back the program, “We’re not going to be able to say ‘if you like what you have, you can keep it,’” said Senator Bob Casey, a Pennsylvania Democrat. “And that basic commitment that a lot of us around here have made will be called into question.”
Casey’s only referring to those who use Medicare Advantage, but that’s not an insignificant number of people. And it would be larger if not for some (ahem) “special provisions” that protect some constituents:
Senators Charles Schumer of New York, Bill Nelson of Florida and Ron Wyden of Oregon are among those who secured special provisions shielding constituents from cuts.
Casey says he wants “very comparable” protections for his state, where more than one-third of Medicare beneficiaries participate in Medicare Advantage. “It’s the kind of thing that will likely be addressed on the floor,” he said.
Well that certainly is “special” now, isn’t it?
Of course, the reason that Medicare Advantage is under attack, particularly in rural areas, is because it costs more than regular Medicare. That’s because when the government tried to get insurers to offer the program in rural areas none would do so because the rates were too low. The government then offered subsidies, and now almost everywhere in the U.S. has Medicare Advantage offered.
Medicare Advantage was created decades ago in hopes that private insurers could deliver Medicare benefits more cheaply. Companies were paid 5 percent less than the traditional program’s costs. Insurers, though, wouldn’t enter many rural markets at those rates, said Biles.
Beginning in 1997, the then-Republican controlled Congress increased subsidies to lure insurers into rural markets. Iowa Senator Charles Grassley said that before the increases, Medicare Advantage was available in only one of his state’s 99 counties. Now it’s in every county.
“To get it in rural America, it took some subsidies,” said Grassley.
Those subsidies made Medicare Advantage more expensive than traditional Medicare. “One of the big reasons Medicare is headed for insolvency is Medicare Advantage, so the notion that it can be left alone is detached from reality,” said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat. “It’s been a runaway train.”
So, Democrats are faced with a Morton’s Fork: either cut Medicare Advantage, which will likely lead to insurers ceasing to offer it, or continue to fund it and be faced with a budget-busting health care plan. Either way, they end up with a plan that is probably not passable.
Incidentally, Humana, Inc. is one of the largest providers of Medicare Advantage coverage, whose revenues are closely tied to its success. You may recall that a couple of months ago, the government decided to try an shut down communications from Humana to its customers warning them that ObamaCare could mean a loss of their coverage.
Two-thirds of Louisville, Kentucky-based Humana’s earnings and one-fifth of Minnetonka, Minnesota-based UnitedHealth Group Inc.’s profits are tied to the program, according to an Oct. 1 Goldman Sachs Group Inc. research note.
“Significant funding cuts to the MA program would likely make the benefits seniors receive from MA unsustainable at their current levels,” said UnitedHealth spokesman Jon Stone in an e- mail. Humana spokesman Jim Turner said “it’s too early to identify the specific impact MA funding cuts would have on premiums and benefits.”
Humana cautioned seniors in September of possible cuts, urging them to “let your members of Congress know why Medicare Advantage is important to you.” The administration barred insurers from sending what it termed “potentially misleading” mailings. It later retreated after Republicans retaliated by blocking nominees awaiting Senate confirmation.
The White House secured one concession: requiring insurers to make their case only to seniors requesting such information.
I guess Congress wanted to be the first to tell them?
In any case, these are the sorts of problems that will (hopefully) make any health care legislation impossible to get passed. The way things are set up, a whole lot of disparate interest groups are pitted against one another, and in order to satisfy one, another has to lose. If Congress expands coverage to everyone, then those with health care will have to pay for it, either through higher premiums, fewer benefits or increased taxes. There simply isn’t enough tax money to fund the program (especially if that money is only going to be raised from “the rich” or some other disfavored group) and provide all the goodies that are being promised. And if the goodies aren’t delivered, then people start asking why we’re changing anything at all. Those questions will be particularly pointed when, whatever changes are made, voters are still likely to see higher costs and reduced services.
Given all the above, I don’t know what kind of bill can possibly emerge from the Senate. Let’s hope that means that none will. And to be on the safe side, plan on voting for candidates that will ensure that outcome.