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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.

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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.

Now, two years later, the “demonstration project” is over, and Medicare Advantage is back on the chopping block. The CBO says that if Obama’s centerpiece legislation is implemented as written, about $200 billion will be funneled out of Medicare Advantage and into Obamacare over the next decade. Like low-premium health plans and their accompanying health savings accounts, both of which Obamacare aims to diminish or eliminate, Medicare Advantage has proven extremely popular: Its enrollment more than doubled, according to the New York Times, in just the past eight years. With over 15 million seniors now in the program—more than a quarter of all Medicare beneficiaries—Obama-care’s $200 billion raid amounts to about $13,000 per current Medicare Advantage enrollee.

But Medicare Advantage is hardly the only part of Medicare that is scheduled to be looted by Obamacare. The CBO projects that, over the next decade, about $1 trillion that would otherwise have been spent on Medicare will be rerouted to Obamacare. That represents more than 10 percent of Medicare’s entire projected funding—which helps explain why Medicare’s Office of the Actuary has projected that, by 2020, Medicare will reimburse doctors and other health care providers at lower rates than Medicaid will. Imagine if Obama had pitched Obamacare by saying, Folks, we’re going to pass health reform, and to pay for it, we’re going to divert more than 10 percent of the money that’s projected to be spent on Medicare. That pitch would have made Jimmy Carter’s “malaise” speech look like a triumph of political rhetoric. But, as the CBO notes, that’s exactly what Obamacare will do.

To be sure, Medicare badly needs to be reformed, and less should be spent on it. But at a time when we are $17 trillion in debt and our Army is shrinking to pre-World War II levels, money shouldn’t be reallocated from Medicare to finance a highly unpopular, $2 trillion overhaul of American medicine.

Similarly, Medicare Advantage needs to be protected, and Obamacare shouldn’t pilfer from it. But it would be far more objectionable for Obama once again to refuse to faithfully execute the law as written in hopes of extricating himself—and his vulnerable Senate allies—from a political thicket of their own creation. Conservatives should be a lot more concerned about abridgements of the rule of law and the separation of powers than about cuts to this or that program—even popular and worthwhile ones.

All of this—the Medicare Advantage cuts, the siphoning of more than 10 percent of all projected Medicare spending, the lawlessness—points to the need to repeal the monstrosity that is Obamacare. And it points to the need to advance a well-conceived conservative alternative to pave the way to full repeal. The 2017 Project has proposed one such alternative. It would free Americans from Obamacare’s unprecedented individual mandate, its skyrocketing health costs, its weakening of job prospects, its fiscal irresponsibility, its consolidation of power and money at the expense of Americans’ liberty, and all the rest of its 2,700 pages of federal largess. At the same time, it wouldn’t touch the employer-based tax break for health insurance for most Americans or fail to provide help to the poor and near-poor who get the vast majority of aid under Obamacare, thereby foreclosing a potentially huge political opening for Obamacare supporters. What it would do is fix what the government had already broken before Obamacare was passed. It would provide real reform by eliminating the unfairness in the tax code by offering a non-income-based tax credit to all Americans who purchase health insurance in the individual market, dealing with the problem of preexisting conditions through commonsense regulations and high-risk pools, and lowering health costs by facilitating a real, vibrant market and encouraging as little involvement by middlemen (whether the government or insurers) as possible. It’s the opposite of Obamacare’s failed approach.

There are other worthwhile conservative alternatives on the table—including a proposal by Senators Tom Coburn, Richard Burr, and Orrin Hatch, and one from the House’s Republican Study Committee—and there is still much discussion to be had about shaping an alternative to bring about desired results. But it should be less doubtful than ever that full repeal is both crucial and achievable, and that advancing a well-conceived conservative alternative is the key to that quest.

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