COMMITTEE on WAYS and MEANS

Chairman Dave Camp

Print this Page The Prescription Pad

Obama Medicare Mailer to Seniors Heavy on Rhetoric, Light on Facts

f t # e
Washington, May 25, 2010 | comments

Yesterday, the Centers for Medicare and Medicaid Services (CMS) announced that seniors will soon be receiving a health care information brochure that looks more like taxpayer-funded propaganda.  Recognizing that the vast majority of Americans, especially seniors, are opposed to their health overhaul, the Obama Administration has unleashed a public relations campaign aimed at Medicare beneficiaries and what the government takeover of health care “means for [them].”

Not surprisingly, the Obama Administration failed to tell seniors that their Medicare program would be cut by more than one-half trillion dollars over the next 10 years.  Also absent from this mailer is any reference to the more than one-half trillion dollars in tax increases, including new taxes on retirement income.

However, the Obama Administration did use Medicare funds to advertise a number of policies that will have little to no impact in seniors’ lives, mostly because they are ineligible for them, including: early-retiree subsidy for retirees under age 65; high-risk pools; a prohibition on pre-existing condition exclusions for children under age 19; allowing children to stay on their parents’ insurance plan until age 26; funding for community health centers; and a federal long-term care insurance program in which retirees are ineligible to enroll.

Moreover, the piece included a number of misleading and/or inaccurate statements, many of which ignored the analysis of the Administration’s very own Medicare actuaries, including:

1.     MYTH:  The new health care law “will provide you and your family with greater savings and increased quality health care”

FACT:  The Democrats’ health overhaul jeopardizes seniors’ access to providers and eliminates Medicare health plans for millions of seniors.

Medicare’s own actuaries found that the one-half trillion dollars in Medicare cuts are so drastic that they caution: “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).” 

The Medicare actuaries also warn that the $206 billion in cuts to the Medicare Advantage program will result in seven million Medicare beneficiaries no longer being able to enroll in a Medicare Advantage plan.

Moreover, Medicare’s own actuaries found that the one-half trillion dollars in Medicare cuts are so drastic that they caution: “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).” The Medicare actuaries also warn that the $206 billion in cuts to the Medicare Advantage program will result in seven million Medicare beneficiaries no longer being able to enroll in a Medicare Advantage plan.  

2.  
MYTH:  Because of the new health law “you will see new benefits and cost savings” and “Medicare will continue to cover your health costs the way it always has”


FACT:  According to the independent Congressional Budget Office (CBO) and Medicare actuaries, seniors in Medicare health plans will see their benefits cut and costs increase because of the Medicare cuts made in the Democrats’ health overhaul.  Currently more than 10 million Medicare beneficiaries receive their Medicare benefits through a Medicare Advantage plan.

CBO notes that “Medicare Advantage plans …provide their enrollees with extra benefits” that traditional Medicare does not offer (e.g. dental and vision coverage, reduced copayments, lower premiums, etc.).  However, because of Democrats’ drastic Medicare cuts, the non-partisan CBO predicts the value of extra benefits received by seniors enrolled in MA will be slashed by $816, on average, in 2019.

The Medicare actuaries also 
predict that, “The new provisions will generally… result in less generous benefit packages.  [Medicare Advantage] plans use rebate revenues to reduce Medicare coinsurance requirements, add extra benefits such as vision or dental care, and/or reduce enrollee premiums for Part B or Part D of Medicare.”  These rebates, which fund these extra benefits, will be gutted by the $206 billion in cuts to the Medicare Advantage program.
 

3.    MYTH:  “The new law creates a program to preserve [employer-based retiree health plans] and help people who retire before age 65 get the affordable care they need.”

FACT:   Retirees and workers’ health benefits are jeopardized by the Democrats’ health law
.

Immediately following passage of the health overhaul, some of America’s biggest companies began warning that the tax changes to the retiree drug subsidy program in the Democrats’ health care bill will reduce earnings by billions of dollars, threatening their ability to offer and retain retiree health benefits.

Fortune.com reported
more bad news for American retirees as a result of the Democrats’ new health care law. After reviewing internal company documents, Fortune.com found that four major U.S. employers (AT&T, Verizon, Deere and Caterpillar) are considering “dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.")  These companies currently offer health benefits to well over 2.3 million employees, retirees and their dependents -- a figure which exceeds the population of 15 states as well as the District of Columbia.  An AT&T report notes that they spent $4.7 billion on medical costs but would be taxed a much lower amount ($600 million) under the Democrats’ law for not offering their 1.2 million employees, retirees, and their dependents’ health care benefits – a savings of $4.1 billion for the company.  Fortune.com estimated Caterpillar could reduce its expenses by 70% if they eliminate health benefits and instead pay the tax.
 
Unfortunately, the retiree reinsurance program in the Democrats’ law that is touted in the Obama Administration’s brochure will not protect these retirees.  The Department of Health and Human Services’ own regulations 
warn that the new law’s subsidy for retiree insurance is vastly underfunded and will run out of money, stating, “Because funding for this program is limited, we expect more requests for reimbursement than there are funds to pay the requests.”  Furthermore, the Administration’s own actuaries estimate that the funds for this program could run out as soon as next year.    
 

4.     MYTH:  “The new law provides affordable health insurance through a transitional high-risk pool program for people without insurance due to a pre-existing condition.”

FACT:  Despite that fact that Medicare beneficiaries are already insured and have no use for a high-risk pool, the Obama Administration’s statement must be selling a different policy, because it certainly doesn’t reflect what was just signed into law.
 
First, the Obama Administration actuaries note that the Democrats’ high-risk pool program is significantly underfunded.  The actuaries predict, “By 2011 and 2012 the initial $5 billion in Federal funding for this program would be exhausted, resulting in substantial premium increases to sustain the program...” 

As a result,
19 states have refused to participate for fear they will be forced to pick up the tab when the federal funds run out.  Even states choosing to participate are planning to deal with the unsustainable funding levels. For example, New Mexico plans on limiting the number of enrollees to 1,500, just a fraction of the estimated 50,000 uninsured New Mexicans with a pre-existing condition.
 
Further, the Democrats’ health law allows the Secretary to establish waiting lists to enroll in these insurance pools, which does nothing to “provide affordable health insurance” to anyone.   
 

5.     MYTH: “More Affordable Prescription Drugs”

FACT: CBO predicts that Medicare Part D premiums will increase because of the Democrats’ law.  However, only a small portion of seniors will actually see any real direct benefit, because just one-in-ten beneficiaries are responsible for prescription drug spending in the "donut hole." 

CBO predicts that Medicare Part D premiums will increase because of the Democrats’ law.  However, only a small portion of seniors will actually see any new benefits.  Most seniors will just have to pay more to receive the exact same benefits they have today.    
 

6.     MYTH:  “Your choice of doctor will be preserved.”

FACT:  The Democrats’ health law, which this brochure is touting, did nothing to address the Medicare physician payment formula (“SGR”).

A physician survey found that because the new health law included no long-term physician payment solution but left a 21% cut to Medicare physician rates, nearly 7 in 10 physicians would no longer participate in Medicare if the cuts go into effect.

American Medical Association President J. James Rohack, M.D., said current Medicare law with no long-term physician payment solution “will also exacerbate the existing physician shortage, as physicians retire early or are forced to limit the number of Medicare patients they can treat – right as the baby boomers enter Medicare.”    
 

7.     MYTH:  The Medicare cuts are “a result of reductions in waste, fraud, and abuse.”

FACT:  Being able to get health treatment is not wasteful, nor is it abuse.

Medicare’s own actuaries found that the one-half trillion dollars in Medicare cuts are so drastic that they caution: “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).” 

 

   ###

f t # e