RUTHFULLY YOURS

Dear Policy Patriots –

The War on Seniors. If you’re on Medicare or if you soon will be, the future doesn’t look great. You and 46 million Americans just like you are going to shoulder more than half the cost of health reform through reductions to Medicare spending. And you will bear additional burdens through indirect taxes on everything from drugs to wheelchairs and crutches.

If you are one of the 11.5 million members of Medicare Advantage plans, you may have already noticed the changes. According to a recent Wall Street Journal article, “across the country, dozens of private insurers…are preparing to pare dental, vision and certain prescription-drug coverage starting next year.”

The chart below shows how cuts in spending will affect seniors in conventional Medicare and Medicare Advantage plans. It shows a little bit of pain at first, ratcheting even higher through time. It’s as though politicians think seniors are like the proverbial frog in the sauce pan. If you turn the heat up slowly, the frog gets boiled before he realizes he’s in trouble.

Sources: National Center for Policy Analysis and
the Congressional Budget Office

Redistributing from Old to Young. Since the enactment of Social Security in the 1930s and Medicare in the 1960s, Americans have lived by a simple compact: younger generations will pay the taxes necessary to support older generations, and, when they’re old, the young will provide for them. If ObamaCare is permitted to go forward, there will be a reverse redistribution of health care resources from the elderly to the young. As a Senior Fellow from the left-leaning Brookings Institution has explained, “We badly need to…reallocate resources from the elderly to younger families.”

Coming Soon: A Two Tiered Health Care System. As Joe Newhouse argued in Health Affairs recently, to follow its mandate the agency responsible for constraining Medicare costs will have to cause Medicare fees to fall further and further behind what private insurers pay. This means that seniors and the disabled would look increasingly less attractive to providers than higher paying private sector patients. In the worst case, Medicare enrollees could find that their access and quality of care is no better than the Medicaid enrollees who are compelled to rely on community health centers and safety net hospitals for their care.

The Spin from Washington. The Obama Administration has alleged that cutting Medicare benefits now will strengthen Medicare in the future. Said Nancy-Ann DeParle, head of the White House’s Office of Health Reform, “I’m sure that some of those additional benefits have been nice, but I think what we have to look at here is what’s fair and what’s important for the strength of the Medicare program long term.”

That’s a nice story, but it’s not the truth. The Congressional Budget Office estimates that health care reform will cut Medicare spending by more than $523 billion. These Medicare cuts aren’t going to shore up Medicare’s future; they are going to create a new entitlement program – taxpayer-funded health insurance for young Americans. The numbers tell the truth: during the next ten years, ObamaCare will spend $938 billion to expand health care for low-income Americans. To pay for it, ObamaCare will cut $523 billion from Medicare and, hardest hit, approximately $200 billion from Medicare Advantage. ObamaCare will also levy new taxes, including higher Medicare taxes.

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Warm regards,

Jeanette Nordstrom
National Center for Policy Analysis