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The Medicare Fight and the ACA

Jun 08, 2011 | By Jean Sammon

I’m tired of the Medicare fight. But I’m afraid we’ll have to endure it for at least another 18 months since 2012 election politicking has already started, and Medicare is the hot issue. 

If we want to save Medicare, which political party should we trust?

The Republicans say that Medicare will go broke because Democrats are doing nothing to make it solvent. The Democrats say that Medicare will no longer exist if Republicans get their way. Both sides are using the issue to whip up fear among seniors who are on Medicare now, and near-seniors who are looking forward to getting Medicare.

Demagoguery on Medicare is nothing new. In recent history, during the debates on the Affordable Care Act (ACA) in 2009 and 2010, opponents accused supporters of “cutting Medicare.” As with most sound bites, the actual truth was a bit more complex. The ACA cut funds to Medicare Advantage plans, which are optional private insurance plans that seniors can get. They sometimes offer additional benefits such as vision and dental coverage.

(I don’t know exactly why Medicare Advantage came to be, but I do remember that Sr. Catherine Pinkerton, who was NETWORK’s healthcare lobbyist at the time, saw this as a step toward privatizing Medicare and did not approve.)

It turns out that the federal government pays about 11%  more for each Medicare Advantage enrollee than it does for an enrollee in traditional Medicare. This is due to a complicated formula that allowed Medicare Advantage insurance companies to get higher payments than traditional Medicare fee-for-service costs. Most of these overpayments went to the insurance companies, not to additional benefits for the people enrolled. So in an attempt to cut growing Medicare costs, the ACA will restructure payments to Medicare Advantage insurance companies to bring them more in line with traditional Medicare costs. But there were no cuts to basic Medicare benefits in the ACA.

Now the Democrats are saying they want to preserve “Medicare as we know it”, meaning the traditional Medicare plan run by the government. And Republicans want to change Medicare into a plan that would give government subsidies to seniors to buy private insurance. To me, the Republican plan sounds similar to what the ACA did for people under 65 who couldn’t afford insurance: give subsidies to help them buy insurance in the private market. So