Tuesday, July 7, 2015

The Elephant in the Room: Promises have been broken

Obama's proposal would force many into a government plan, despite his guarantees.

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Nothing is more critical to the success of President Obama's health-care legislation than his promise that no American will have to give up his or her health plan. A related promise runs a close second: that the "government option" will create competition for the private sector, not replace it.

Why are these promises so critical? Because, while most Americans are open to fixing health care, they're also happy with their private insurance. One would think Obama would oppose any provision that appears to force Americans into a government plan. Think again.

The Medicare Advantage program is composed of private insurance plans within Medicare, created to compete with government-run Medicare. Obama's call to cut funding to the program could eviscerate it.

According to Medicare Advantage insurers, their disproportionately poor and minority enrollees do better than Medicare's on many measures, getting much more primary care and avoiding unnecessary hospital admissions. Since 2004, enrollment has doubled to 10.2 million, about a quarter of Medicare beneficiaries. The program has become popular with poorer seniors because it offers more benefits for less money, including physicals, hearing aids, and glasses.

While the reforms proposed by Congress don't abolish the program, they eliminate more than $100 billion of its subsidy, which is sure to reduce benefits. On Sunday, ABC's George Stephanopoulos asked Obama how he squares that with his promise that no one would have to give up current coverage. Obama said that "these folks are going to be able to get Medicare that is just as good, provides the same benefits, but we're not subsidizing them for $18 billion a year." So, according to Obama, seniors may not have the same coverage, but they will get government-run Medicare that is "just as good."

According to the Congressional Budget Office, over the next 10 years, 2.7 million seniors who would have signed up for Medicare Advantage would end up in Medicare. And those in the program would see a reduction in benefits.

That's one promise broken.

What about Obama's promise about competition? He says he wants to cut Medicare Advantage subsidies to level the playing field between these plans and Medicare. But unlike Medicare, which can set artificially low prices, Medicare Advantage plans must pay market rates. Often, Medicare reimbursements don't even cover costs, so providers shift costs to private insurers, making them uncompetitive - exactly what many say would happen with the "government option."

I supported Medicare Advantage subsidies so the program would be available in rural areas, where managed-care plans are more expensive to operate. In exchange for the subsidies, Congress required program insurers to offer more benefits. And contrary to Obama's claim that the subsidies prop up huge company profits, the average plan profit is just 5 percent.

Bottom line: Cutting Medicare Advantage will eliminate private competition, meaning more government coverage.

That's two promises broken.

These broken promises have become a sore spot for Democratic congressional leaders such as Senate finance chairman Max Baucus. He and administration officials have gone so far as to threaten Medicare Advantage insurers with sanctions if they continue to tell seniors the facts about Obamacare. Oh, what webs we weave.


Rick Santorum can be contacted at rsantorum@phillynews.com.
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