“I just want to be clear, again: Seniors who are listening here, this does not affect your benefits. This is not money going to you to pay for your benefits; this is money that is subsidizing folks who don’t need it.” Or so President Barack Obama promised our nation’s seniors earlier this year. Problem is, as we have pointed out many times, this is simply not true: Obamacare will absolutely cause reduced Medicare benefits for Seniors. Congressional Budget Office Director Douglas Elmendorf told Congress that and even the New York Times has grudgingly admitted as much.
Specifically, every version of Obamacare waiting to be merged into one bill on Capitol Hill cuts billions of dollars from the Medicare Advantage program. One of the dirty little secrets about Medicare is that it actually only covers slightly more than half of all health care costs for seniors and disabled citizens. Medicare recipients buy the balance of their health care coverage through private supplemental insurance or Medigap coverage. Most seniors, therefore, actually have at least two health insurance providers, the federal government through Medicare, and a private supplemental insurer. Medicare Advantage allows seniors to pay a single premium and receive a much broader range of health care services than just government-run Medicare provides, including prescription drug coverage, preventive-care services, routine physical examinations, and coordinated care for chronic conditions.
The Baucus bill, which will be voted on in the Senate Finance Committee later this week, is the least offensive Medicare reform plan currently being included in Obamacare. However, the Baucus bill fails to achieve true reform in two ways: First, it takes all ’savings’ from Medicare reform and immediately plows them into a new deficit exploding entitlement. Second, and more importantly, it preserves the old fee-for-service Medicare program which is based on central planning and price controls.
The better option would be to move Medicare towards a true “premium support” system where the government would make direct contributions to all beneficiaries who could then control how to spend their own health care dollars. This would be the same model as the Federal Employees Health Benefits Program (FEHBP) which provides health insurance to Members of Congress. Heritage fellow Bob Moffit explains:
With modifications, Congress could adopt a premium support system broadly similar to the FEHBP and secure the same positive results in intense competition, patient choice, high quality care, and patient satisfaction. Without such modifications, there is no real reform but just more of the same.
Instead of breaking the President’s promises, and raising health care costs for America’s seniors, Congress should hit the reset button and start over with real competition and state based reform that lowers costs and improves care.
Quick Hits:
- Politico details the “Obama Gitmo Blame Game.”
- The Obama administration immigration plan repeats all of Bush’s mistakes including blanket amnesty for millions of illegal immigrants.
- Gallup’s Consumer Confidence Index fell by 9 points to -29 and Gallup’s Job Creation Index fell 3 points to zero.
- According to a subpoena served Monday by the Louisiana attorney general, ACORN’s embezzlement scandal totaled $5 million, not $1 million as claimed by the community organizers.
- According to the International Energy Agency, despite the fact that global temperatures have not risen in the past year, the cost of cutting enough carbon to stop global warming has risen 37% since just last year to a total of $10 trillion.
Paul Krugman just can’t stop spreading misinformation about Medicare and health insurance. Today he writes:
In the individual insurance market, where people buy insurance directly rather than getting it through their employers, so much money goes into underwriting and other expenses that only around 70 cents of each premium dollar actually goes to care.
This is just plain deceptive. The latest government figures available, from 2007 (see Table 12), show that 87.8 cents of every private health insurance premium dollar went to personal health care bills. And that remaining 12.2 cents? In addition to underwriting, administration, advertising, and (gasp!) profit, that 12.2 figure also includes some patient care that insurance companies provided themselves, like disease management and on-call toll-free nurse consultations. Krugman continues:
Today, Medicare — which is, by the way, one of those “single payer” systems conservatives love to demonize — covers everyone 65 and older. And surveys show that Medicare recipients are much more satisfied with their coverage than Americans with private insurance. Still, most Americans under 65 do have some form of private insurance.
But what Krugman fails to tell readers, or perhaps doesn’t even know, is that many Americans OVER 65 also have some form of private insurance. In other words, Medicare is not quite the “single-payer” paragon that Krugman holds it out to be. The latest government figures available, from 2005 (see Chart 6-3), show that Medicare pays only 51% of Medicare beneficiaries’ health care costs. The rest is made up by the beneficiaries themselves and … those evil health insurance companies.
Krugman is in touch with one key reality: the federal government does play a huge role in our current health care system, controlling more of the spending in the health sector than in any other area of our economy. And that role has been accelerating rapidly. If our health care system is in such bad shape now with so much government control, then why on Earth does Krugman believe even more government control is the answer?