CMA Health Policy Blog

The Medicare Debate

October 12, 2012 at 8:35 pm Judith Stein Leave a comment

Medicare was in the spotlight in the Vice Presidential debate as the candidates outlined their respective plans for the program millions of American families rely on. Unfortunately, some pervasive myths were also highlighted regarding the impact of health care reform and the Ryan plan on Medicare and the 49 million Americans who count on it. [Check out the Center for Medicare Advocacy’s Facebook and Twitter pages (Follow @CMAorg) for a full list of Medicare Myths and Facts from the debate.]

One of the myths that was repeated during the debate is the familiar claim that the Affordable Care Act cuts Medicare by $700 billion – the same claim that has been debunked time and again. In fact the $700 billion in savings are largely a result of rolling back unnecessary, wasteful overpayments to private Medicare insurance plans. Congressman Ryan’s budget plans have included these same $700 billion reductions; however, instead of ending overpayments to private insurance companies with the savings, Ryan’s plans would give private insurance companies an even larger share of Medicare expenditures.

The Ryan Plan to end Medicare would provide each individual with an annual allowance with which to purchase a health plan in the private market, would raise costs for current and future beneficiaries, and would repeal important Medicare benefit improvements, added by the Affordable Care Act (ACA). The ACA Medicare improvements include extending the solvency of the Medicare Trust fund, lowering prescription drug costs, adding new coverage for preventive services, and eliminating cost-sharing for most such services, such as mammograms and prostate screenings.

Mr. Ryan and other policy-makers often talk about waste, fraud, and abuse in Medicare. Yet too often these same policy-makers plan to extend private Medicare to restructure the entire Medicare program. They claim this will save money for Medicare, taxpayers, and beneficiaries. But a new study, once again, confirms just the opposite.

In a forthcoming issue of the International Journal of Health Services, researchers report that “Medicare has overpaid private insurers by $282.6 billion, or 24.4 percent of all MA payments, since 1985. In 2012 alone…MA plans are being overpaid by $34.1 billion, or 6.2 per¬cent of total Medicare spending”. This means nearly a quarter of all payments to private insurance companies in Medicare, subsidized with taxpayer dollars, have been unnecessary overpayments that have gone to profit margins and administrative costs, not health care services. Talk about waste!

The authors of the International Journal study conclude that the decades-long experiment with privatizing Medicare should end. Instead, policies should be developed to focus on the real issues of overall health costs and access to coverage. However, if the Ryan plan takes effect, the wastefully expensive private Medicare program will be expanded. Meanwhile, the cost-effective traditional Medicare program will be allowed to wither, and beneficiaries will become responsible for dramatic increases in out-of-pocket costs.

Mr. Ryan’s plan continues wasteful overpayments to private insurance companies at the expense of beneficiaries and taxpayers. It is not a plan to preserve Medicare, protect older and disabled people, or reduce health care costs.

Entry filed under: Access to Health Care, Deficit Reduction, Fiscal Responsibility, Health Care Reform, Health Care Reform Repeal, Health Insurance, Medicare, Medicare Reform, Myths, Myths, Premium Support, Public vs. Private Health Coverage, Reform, Ryan Plan, Vouchers. Tags: Affordable Care Act, Deficit; Medicare, Fact and Fiction, Health Care Reform, Health Reform & Next Steps, Medicare, Premium Support, Public plan, Ryan, voucher.