How Scared Should Seniors Be About Medicare Cuts?

Every election season, one party or another comes up with a scare-the-elderly issue. In the past, the Democrats have threatened that if Republicans won, they would do away with Social Security, leaving seniors to beg on street corners for stale crusts of bread.

This year, the GOP is claiming that health care reform will "gut" Medicare. If seniors don't vote their way, the poor dears will find themselves languishing on gurneys for months waiting to see their G.P.s. Typical is the claim of a TV spot from America's Health Insurance Plans, an industry group, that millions of seniors will see their Medicare slashed by Congress. "Is it right to ask 10 million seniors on Medicare Advantage for more than their fair share?" inquires the commercial. Another ad by the 60 Plus Association, ostensibly a seniors advocacy group which is in fact funded by the pharmaceutical industry, charges that health care reform will be paid for "on the backs of America's seniors by cutting more than $500 billion from Medicare."
Normally, such cheesy campaign tactics would inspire me to hit the mute button or flip over to reruns of Reba. But this year, alas, I myself reached that magic age (don't make me say the number) and became a Medicare recipient. So now I had to wonder: Should I be frightened? I yanked up my compression hosiery, hopped on my walker and determined to investigate. So here are the three major scare stories going around and what I learned about them:

1. Health care reform legislation will gut Medicare by $500 billion. That sounds pretty frightening since Medicare expenditures for 2010 are projected to be $519 billion. Would the new law restrict us to only $19 billion? Not on your life. In fact, the law doesn't cut Medicare spending. Instead it reduces the growth of the program's future spending by $555 billion or 7 percent over the next ten years. That means that the government will be spending $7.1 trillion over the next decade instead of $7.1 trillion plus $555 billion. Medicare outlays will actually increase to an estimated $929 billion in 2020, according to the Congressional Budget Office's most recent projection.
2. Payment reductions to hospitals, doctors and nursing homes will be so severe that they will stop accepting Medicare. Already, some health care providers have begun to limit their Medicare caseload because payments from the program aren't keeping up with costs. And things could get worse. Physicians were scheduled to see payments reduced by 30 percent as of January 2011 even before the passage of health care reform. If all that goes through, "Medicare beneficiaries would almost certainly face increasingly severe problems with access to care," declared a Centers for Medicare and Medicaid Services report. This possibility is enough to get anybody's granny panties in a twist except that the CMS goes on to suggest that Congress will likely modify any reductions -- as it frequently has in the past. Canceling the doctor cuts, as the Dems might do, would cost about $300 billion, pretty much eliminating that $555 billion in growth reduction. If the Republicans are in control of Congress, they would probably find the money by eliminating some provisions of the new health care act, for example, extension of Medicaid to more people or the requirement that insurers spend a certain amount of premium revenue on health care services.
3. Members of Medicare Advantage programs will be stuck paying more. This one is bit of a stretch. Typically, the government pays insurers who sponsor Medicare Advantage programs (which are really managed care plans) about 9% to 13% more per capita than it lays out for regular Medicare patients. The extra money was designed to go to enhancements, including wellness, vision and dental care and even gym memberships. The health reform law gradually reduces government payments to Medicare Advantage plans to bring them in line with the costs of average Medicare recipients. Some beneficiaries could see their gym memberships and dental care go bye-bye or may have to pay extra to enjoy such perks. But they won't be getting the shaft, as campaign ads imply.

Getting us oldies riled up makes political sense -- of the cynical variety. In many congressional districts, people over age 65 comprise a significant portion of the electorate; and they are more reliable voters -- particularly in mid-term elections -- than young people who have better things to do, like playing Mafia Wars or Happy Aquarium. But what the fear-mongering ignores is the startling fact that we 65-plus folks will be receiving some rich new Medicare benefits, including annual check-ups and a huge improvement to the government's prescription drug plan. Until now, people had no coverage for drug expenditures between $2,700 and $6,100. The new law will gradually close that so-called doughnut hole by 2020.
Given all that, I feel it's safe to return to my rocking chair.