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Misinformation on Medicare Reform

9:54 AM, Jun 7, 2011 • By JEFFREY H. ANDERSON
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A recent National Journal article misrepresents the effects of the proposed Medicare reforms in the House of Representatives on current seniors. House Budget Committee chairman Paul Ryan has repeatedly noted that these proposed Medicare reforms — which would not go into effect until 2022 — would not affect anyone who is currently at least 55 years of age, let alone current seniors. Tim Fernholz, however, asserts in the National Journal that the “plan to grandfather traditional Medicare for those older than 55” could “have negative consequences for current seniors.” He writes:

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“In 2022, when the limited-subsidy program would be introduced, seniors who qualified for traditional Medicare would be allowed to switch to the new program. If healthier or younger beneficiaries make the change to lower their out-of-pocket costs, those still participating in Medicare would be part of an insurance pool that is less healthy and more expensive. To cover those higher per-person costs, Medicare might well be forced to either raise premiums or limit reimbursements to health care providers — which could prompt many to stop taking Medicare patients.” 

The Congressional Budget Office (CBO), however, directly addresses this point and refutes Fernholz’s claim. The CBO writes that under the House’s proposed reforms (emphasis added),  

“Eligibility for the traditional Medicare program would not change for people who are 55 or older….As a result, the average age and average costs of enrollees remaining in the traditional Medicare program would increase over time.  However, enrollees’ premiums under traditional Medicare would be adjusted to equal what they would be under current law — a so-called hold harmless provision.

In other words, under the House plan, anyone who is currently 55 or older wouldn’t pay higher Medicare premiums than under current law — ever

Fernholz’s other claims don’t involve the House’s proposal to transform Medicare into a premium support system — which would lower costs by increasing competition and choice — but rather its proposed Medicaid reforms and its proposed repeal of Obamacare. Unlike the proposed Medicare reforms (which wouldn’t take effect until 2022), the proposed Medicaid reforms and repeal of Obamacare are part of the House’s 10-year budgetary proposal — a proposal that would cut deficit spending by 46 percent and more than $1 billion a day versus President Obama’s proposed budget. (The Democratic Senate hasn’t advanced a budget or shown any signs of doing so, yet Democratic senators have unanimously rejected both Ryan’s and Obama’s budgets.)

Fernholz also fails to note that the CBO writes, “Under current law [which means under Obamacare] constraints on payment rates for providers of Medicare services may result in diminished access to care and lower-quality services, although the extent of such changes is very difficult to predict.  In addition, rising taxes (under the extended baseline scenario) and surging federal debt (under the alternative fiscal scenario) might accentuate concerns about the budgetary situation and thereby lead policymakers to reduce Medicare benefits.”

Fernholz does not note that President Obama has subsequently called for further reductions in payment rates for Medicare providers (thereby further jeopardizing current seniors’ access to care), to be achieved by further empowering the largely unchecked and rather clearly unconstitutional Obamacare Independent Payment Advisory Board (IPAB). Ryan’s budget would repeal IPAB.

See here for more on the “extended baseline scenario,” the “alternative fiscal scenario,” and the Ryan plan — the three basic choices for Americans’ fiscal future.  

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