ObamaCare Cuts Bite Medicare Advantage

Investor's Business Daily

Nearly four in 10 seniors worry ObamaCare will cause them to lose doctors they like, despite President Obama's repeated promise to the contrary, according to the latest IBD/TIPP Poll. That translates into nearly 16 million people age 65 and over.

Their concerns appear to be justified.

Many seniors are, in fact, already losing access to their doc tors, and more than half a million are losing access to plans they liked this year, as $200 billion in ObamaCare-mandated cuts to the popular Medicare Advantage program start to take effect.

Earlier this month, seniors learned that UnitedHealth (UNH) is dropping thousands of doctors from its Medicare Advantage plans, citing "expected cuts in Medicare payments tied to the Affordable Care Act.

A raft of Advantage plan cancellations also threatens seniors' access to their doctors.

Some 526,000 seniors — 5% of Medicare Advantage enrollees — are losing access to plans they had this year, according to a report this week from the Kaiser Family Foundation. They will need either to pick another private plan or rejoin the old Medicare program.

The IBD/TIPP Poll found that 6% of seniors say they or a member of their household has received a cancellation notice from their existing health plan.

Kaiser also found that the total number of Medicare Advantage plans has dropped 29% since 2009, from 2,830 plans to 2,014 this year. The typical senior can choose from 18 plans this year, down from 20 last year.

Popular With Seniors

Since the late 1990s, Medicare has let seniors choose from competing private health plans that contract with the federal government to offer Medicare benefits.

Enrollment has climbed rapidly in recent years, with more than 14 million seniors in a Medicare Advantage plan now.

Obama and other Democrats have long complained, however, that Medicare overpaid these private companies, saying they get "unwarranted subsidies" that "pad their profits but don't improve the care of seniors.

So ObamaCare cuts roughly $200 billion from projected Medicare Advantage spending over the next 10 years, with the idea of bringing its costs more in line with traditional Medicare.

To date, only about 10% of the cuts have been enacted, but are finally starting to ramp up.

Whether the spending cuts are justified or not, the administration knew they would cause seniors to lose access to Medicare Advantage plans they liked — even as Obama was promising the public that wouldn't happen.

Advantage Cuts Delayed

In fact, both the Centers for Medicare and Medicaid Services and the Congressional Budget Office projected in 2010 that millions would be pushed off Medicare Advantage entirely and back into traditional Medicare over ObamaCare's first 10 years.

Recognizing the political risk of deep cuts to a popular program in an election year, the administration created a dubious $8.3 billion "quality improvement" demonstration project, with the bulk of the money given to Medicare Advantage plans in 2012.

Not only did this project dwarf any previous federal demonstration project, it was so poorly designed that it was unlikely to "produce meaningful results," according to a Government Accountability Office audit.

But the funds masked nearly all of ObamaCare's scheduled Medicare Advantage cuts for 2012, and much of cuts for this year.

In addition to plan cancellations, seniors are starting to feel the impact of these ObamaCare spending cuts via higher costs.

Higher Premiums

Medicare Advantage enrollees who stay in their current plans face a roughly 14% increase in premiums, on average, the Kaiser report found. Out-of-pocket costs will climb 11%, on average, as plans raise their out-of-pocket limits. Last year, just a quarter of Medicare Advantage plans had out-of-pocket maximums above $5,000. This year, 41% do.

Starting next year, ObamaCare imposes a tax on health insurers that will total about $100 billion over the next decade. That will fall on Advantage plans as well as other private insurance.

The administration argues that seniors benefit from the law's new Medicare Advantage ratings that reward plans that score well on quality measures. The government also released a report this week claiming that ObamaCare has saved seniors nearly $9 billion on drug costs since 2010.

Other ObamaCare findings from the IBD/TIPP Poll:More than two-thirds (68%) say ObamaCare implementation has been "poor" or "unacceptable," and 41% say their opinion of the law has worsened as a result of the launch fiasco.

More than half (54%) oppose ObamaCare, and half want it repealed.

The public has little confidence the website problems can be fixed before the end of the year. Just over a third (38%) said they were confident it would be working by them. That's despite 70% of Democrats saying they expect a working site.

Overall, 9% say either they or someone in their household has received a cancellation notice from their current health plan. That translates into nearly 11 million households.

View Comments (4)