April 07, 2014, 05:15 pm
Healthcare cuts canceled after Dem complaints
The Obama administration announced Monday that planned cuts to Medicare Advantage would not go through as anticipated amid election-year opposition from congressional Democrats.
The cuts would have reduced benefits that seniors receive from health plans in the program, which is intended as an alternative to Medicare.
Under cuts planned by the administration, insurers offering the plans were to see their federal payments reduced by 1.9 percent, which likely would have necessitated cuts for customers.
Instead, the administration said the federal payments to insurers will increase next year by .40 percent.
The healthcare law included $200 billion in cuts to Medicare Advantage over 10 years, in part to pay for ObamaCare.
The Centers for Medicaid and Medicare Services (CMS) on Monday said changes in the healthcare market meant it did not need to make those cuts to Medicare Advantage this year.
It cited an increase in healthy beneficiaries under Medicare, which it said has lowered projected costs for that program.
CMS separately is delaying a risk assessment proposal that was set to take affect under ObamaCare.
Obama administration proposes 1.9% cut in Medicare Advantage payments
Medicare Advantage plans could see payment reductions of 1.9 percent next year under proposed rates announced Friday by the Centers for Medicare & Medicaid Services.
Insurers, who have led a fierce lobbying campaign against payment reductions, have said the combination of the health law’s lower payment rates, new fees on health plans and other factors, including automatic federalspending cuts known as “sequestration,” mean that Medicare Advantage plans will see their Medicare payment rates drop by 6 percent – or even more — in 2015.
CMS said Friday its preliminary estimate is “the combined effect of the Medicare Advantage growth percentage and the fee-for-service growth percentage.”
America’s Health Insurance Plans said they are reviewing the details of the announcement to determine the total impact of the federal payment rates. In a statement, AHIP President and CEO Karen Ignagni was critical of the proposed rates, saying, “The new proposed Medicare Advantage cuts would cause seniors in the program to lose benefits and choices on which they depend.”
Obama flip-flops on Medicare drug coverage
The Obama administration, in an abrupt about-face, said on Monday it would drop proposed changes to Medicare drug coverage that met wide opposition on grounds they would harm health benefits for the elderly and disabled.
Late last week, more than 370 organizations representing insurers, drug makers, pharmacies, health providers and patients urged the Centers for Medicare and Medicaid Services (CMS) to withdraw changes it had proposed for Medicare Part D.
One of the federal government’s most successful and cost-effective healthcare programs, Part D provides drug benefits for the elderly and disabled through private insurers to 36 million enrollees.
Critics said the changes, if adopted in coming months, could not only undermine Part D benefits but impact drug benefits available through Medicare Advantage, a program that allows Medicare beneficiaries to obtain their major medical coverage through private insurers.
“Given the complexities of these issues and stakeholder input, we do not plan to finalize these proposals at this time. We will engage in further stakeholder input before advancing some or all of the changes in these areas in future years,” CMS Administrator Marilyn Tavenner advised in a letter sent on Monday to members of the Senate and House of Representatives.
The proposals were opposed by both Republicans and Democrats in Congress. The Republican Party had already begun to look for ways to leverage popular anger over the changes into campaign attacks on Democratic incumbents who could be vulnerable in November’s election showdown for control of Congress.
Elated critics of the proposed changes said the government had effectively agreed to start over in the face of broad, bipartisan opposition.
The Obama administration’s proposed cuts to Medicare Advantage plans — the private insurance plans that cover almost 30 percent of all Medicare beneficiaries — are fair and reasonable. As it happens, they are also mandated by law. Yet Republicans, sensing a campaign issue, are telling older and disabled Americans that the administration is “raiding Medicare Advantage to pay for Obamacare.” The health insurance industry, for its part, is warning that enrollees will suffer higher premiums, lower benefits and fewer choices among doctors if the cuts go into force.
Some of this could in fact happen, although the industry has cried wolf before and continues to thrive. But the key point is this: Over the past decade, enrollees in Medicare Advantage have received lots of extra benefits, thanks to unjustified federal subsidies to the insurance companies. Now they will have to do with somewhat less, unless the insurers are willing to absorb the cuts while maintaining benefits. Enrollment in these private plans, offered by companies like UnitedHealth and Humana, has more than doubled since 2006, in part because of lower premiums and extra benefits, like gym memberships, that are not included in traditional fee-for-service Medicare.
What made these perks possible was, in effect, a subsidy from taxpayers and other Medicare beneficiaries. The federal government paid the private plans, on average, 14 percent more in 2009 than it would cost to treat the same people in traditional Medicare. The insurers used this extra money to reduce enrollees’ costs and add benefits.
The 2010 Affordable Care Act rightly required that these subsidies be reduced, although it stopped short of completely eliminating them. The reductions began to take effect in 2012, and have not, so far, visibly harmed beneficiaries or the plans. Since enactment of the law, Medicare Advantage premiums have fallen by 10 percent, the opposite of what some expected, and enrollment has increased by nearly 33 percent, according to the administration. But as the law intended, federal payments to the private plans dropped — from 7 percent more than services under traditional Medicare in 2012 to 4 percent more last year. The administration now proposes to further reduce the payments to Medicare Advantage plans in 2015. The loudest criticism has come from Republicans, but plenty of Democrats have chimed in.