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Obamacare vs. Medicare

Mar 10, 2014, Vol. 19, No. 25 • By JEFFREY H. ANDERSON
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One of President Obama’s greatest political challenges has been hiding the fact that Obamacare is largely financed by siphoning huge sums of money out of Medicare. In particular, Obamacare cuts—or guts—Medicare Advantage, the popular program that allows seniors to get their Medicare benefits through private insurers. In fact, it’s only these Medicare Advantage cuts that allow the Congressional Budget Office to pretend that Obamacare won’t raise deficits—an implausible notion that polling indicates only a very small percentage of particularly credulous citizens believe.



Late on Friday, February 21, in a 148-page, after-hours communication, the Obama administration declared that cuts to Medicare Advantage, long put off, will finally take effect in 2015. Predictably, and understandably, many conservatives responded by criticizing the announcement.

The cuts are bad in and of themselves, but cuts to the program have been a part of Obamacare’s written text from day one. So the real question is not whether Obamacare will cut Medicare Advantage; it’s whether the Obama administration—which doesn’t want those cuts to become evident when Medicare’s open-enrollment period begins on October 15, less than three weeks before Election Day—will take unilateral, lawless executive action to stop the cuts from taking place. That’s what has happened to date.

In the lead-up to Obama’s reelection, he and his administration weren’t satisfied with having mailed out full-color, taxpayer-funded propaganda brochures and run millions of dollars’ worth of taxpayer-funded TV ads featuring Andy Griffith, all touting Obamacare to seniors. They knew that such nonsense would quickly be exposed if Obamacare’s prescribed Medicare Advantage cuts were to take effect: Seniors would have started noticing those cuts on October 15, 2012.

To avoid that, the Obama administration launched an $8.3 billion “demonstration project.” The Centers for Medicare & Medicaid Services say such projects are meant “to test and measure the effect of potential program changes.” This one, though, was a shameless and almost certainly illegal effort to hide Obamacare’s Medicare Advantage cuts from seniors until they could no longer express their displeasure at the ballot box. How big a tally is $8.3 billion? It’s about seven times what Obama’s campaign raised in total.

The Government Accountability Office identified this “demonstration project” as a sham. The GAO highlighted the project’s myriad “design shortcomings,” including its excessive focus on 2012, its awarding “most” of its “quality bonus[es]” to plans that didn’t perform at above-average levels, and its lack of a control group. The GAO, not known for its bluntness, concluded by writing that Health and Human Services Secretary Kathleen Sebelius “should cancel” the project and perhaps consider conducting “an appropriately designed demonstration” in the future. A few months later, the GAO reiterated that all demonstration projects “must meet the criteria set forth” in law, which the Obama administration had “not established” it had done, leaving the GAO “concerned.”

At the time, Nebraska Republican Ben Sasse, HHS assistant secretary for planning and evaluation until January 2009 and now a Senate candidate, said, “If a presidential administration can simply make up the authority to make law and give itself the power of the purse to implement its new law—which not only isn’t designed to make existing law work but is actually against the purpose of existing law—why do we need a Congress?” Sasse added, “In scope and intention, this is something completely new, and if it’s allowed to establish precedent, the only limit on what future administrations could spend money on, or how much they could unilaterally spend, would be their own electoral calculations about what they could get away with.”

Were Medicare demonstration projects typically so huge or so lacking in legal justification pre-Obama? Actually, they were usually small and uncontroversial. The GAO said that from 1995 through the onset of Obama’s ploy—a period spanning the bulk of the Clinton administration, all of the George W. Bush administration, and beyond—85 Medicare demonstration projects were conducted. Obama’s $8,300,000,000 gambit cost more than all 85 of those prior projects combined.

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