Opening Statement of Ranking Member Jim McDermott

Jul 24, 2014
Press Release

(Remarks as Prepared)

Mr. Chairman:

I want to thank you for holding this hearing today. There’s a good story to tell about the Medicare Advantage Program. And I’m pleasantly surprised my colleagues across the aisle have provided today’s stage for telling this story.

Before we get to the good news about the program, we’re going to hear a lot of specious claims this morning about the ACA’s effect on Medicare Advantage, but the truth is something different entirely.  

Thanks to the changes made by the ACA, both Medicare Advantage and traditional Medicare are on a much stronger footing.

Since passage of the ACA, the MA program has seen record-high enrollment - with more than 15 million Medicare beneficiaries enrolled in an MA plan. 

30 percent of all Medicare beneficiaries are enrolled in Medicare Advantage plans.

Since passage of the ACA, premiums have reduced or held steady. In total, Medicare Advantage premiums have fallen 14.3 percent. That means MA enrollees pay an average premium of about $31 per month.

Underlying Medicare benefits have increased in both MA and traditional Medicare – meaning that plans have more money to spend on other benefits. These are facts, Mr. Chairman. 

One of the key improvements that the ACA made to MA was to cut down on overpayments that were threatening the solvency of the program. 

Thanks to misguided provisions in the Republicans’ 2003 prescription drug legislation, the federal government was paying plans an average of 114 percent of the costs of traditional Medicare.

Independent analysis from the GAO, MedPAC and countless others pointed out that this wasteful spending was putting Medicare on an unsustainable course.

To fix this, the ACA improved how we calculate payment rates. These reforms have brought payments more in line with the costs of traditional Medicare, while emphasizing efficiency and quality.

And, even though we’ve reduced Medicare Advantage over-payments, insurance companies are doing just fine.  Their stock prices have surged, and their profits continue to grow.

Reducing MA over-payments has also improved Trust Fund solvency and has helped drive down Medicare spending.  It’s a fact that overall per capita growth in Medicare spending is at record lows, thanks to the ACA.

The savings, most of which were recommended from non-partisan experts (including Med PAC and others), come from changes to payments for plans and providers. 

And, despite their rhetoric, my colleagues on the other side must have thought they were well-justified, too.  In fact, every Republican on this dais has voted – multiple times – in favor of these very same savings as part of the Ryan Budget.

At other times, my Republican colleagues have been known to claim these savings have come at the expense of beneficiaries.  This is false.

We actually increased benefits – in MA and traditional Medicare – by expanding preventive care, eliminating cost-sharing for preventive care and improving coverage for prescription drugs.

My colleagues across the aisle also talk about declining choice and access in Medicare Advantage plans, but the reality is that beneficiaries have more access to MA plans than ever. 

More than 99 percent of eligible beneficiaries have access to an MA plan, and the average beneficiary has the option to choose between 18 plans. Given these facts, it doesn’t sound to me like the program is having any difficulty. 

Quite the opposite.