Conservatives regularly claim that Obamacare “cuts” Medicare, and will cause less seniors to enroll in private Medicare Advantage (MA) plans while forcing insurers to cut benefits. Now, the exact opposite of those dire predictions is occurring, as record numbers of seniors have enrolled in Medicare Advantage, according to a new analysis by the Kaiser Family Foundation.
Obamacare extends Medicare’s solvency by eliminating some $700 billion in excess payments that are made to providers that contract with private MA plans and reducing hospital payments in an effort to incentivize efficiency. By scaling back the MA payments, the law tries to bring MA spending more in line with the traditional, public Medicare program, which consistently comes in under budget even as private plans drive up costs. As the new enrollment data proves, those cuts — which began being implemented last year — haven’t had any adverse effects on enrollment or benefits while significantly strengthening the Medicare entitlement.
But conservatives have been apoplectic about the provision. During the 2012 election cycle, the Republican presidential ticket of Mitt Romney and Rep. Paul Ryan (WI) regularly hammered President Obama for “stealing” from Medicare. Former Republican Conference Chairman Rep. Jeb Hensarling (R-TX) and almost the entire Republican congressional caucus echoed those sentiments, suggesting that the savings would undermine MA and discourage seniors from signing up. Fox News contributor Peter Johnson, Jr. went so far as to say that senior citizens would be “dying as a result” of Obamacare’s changes to Medicare.
These criticisms weren’t limited to conservative politicians and media figures. As recently as May, right-leaning think tank the Heritage Foundation blasted the “Medicare cuts” and warned that enrollment in Medicare Advantage would be about half of what it is now by 2017 because of the health law. Heritage also predicted that seven million seniors would leave Medicare Advantage in the next four years, based on dour government actuary predictions.
The actual numbers prove otherwise. Over one million seniors enrolled into Medicare Advantage plans in 2013, and over 3.3 million have enrolled since the health law’s passage in 2010. That’s an increase of 30 percent in three years. The share of Medicare beneficiaries on MA plans is now at an all-time high of 28 percent.
Furthermore, premiums have been going down while plan quality has been going up. Average premiums for Medicare Advantage plans have decreased by 10 percent since Obamacare was passed. The law’s bonus incentives for insurers to improve benefits while lowering costs also led to 28 percent of Medicare Advantage plans being upgraded to a higher star rating between 2012 and 2013.
It’s possible that insurers will use the cuts as an excuse to shift costs onto old and sick Americans in the future. But if the current trend holds, seniors who choose a private plan under Medicare Advantage will have access to a program that is solvent, robust, and doesn’t gouge prices while driving up wasteful government health care spending.