Medicare Advantage is a federally sponsored and paid for program that allows those on Medicare to receive their Medicare benefits via a private insurer. Medicare enrollees can thus receive their Medicare insurance directly from Medicare or indirectly from a private insurer that has contracted to provide that coverage.
The private insurers offering Medicare Advantage (MA) receive not only federal funding to provide for basic Medicare benefits but also a subsidy, averaging about 14 percent, to provide that coverage. Republicans support MA because it gives private insurers a piece of the Medicare business. Private MA plans have captured about 25 percent of the Medicare pie. (See NYT summary.)
The 14 percent subsidy was supposedly justified to encourage MA providers to provide Medicare coverage in high cost and rural areas that might not have had sufficient Medicare coverage. But the subsidy has made MA a highly lucrative business for private insurers.
The Baucus bill would reduce these subsidies by about
$115 $123 billion over ten years. [The House bill would cut over $150 billion, and the Administration wanted more.] And one of the ways they would do it is to require potential MA insurers to bid in an auction to win the right to offer MA coverage in each region. In theory, the bid-based auction would reduce the payments to MA’s private insurers.
MA insurers are naturally upset about losing
$115 $123 billion, and they’ve been warning seniors that if Congress cuts MA funding, seniors will lose Medicare benefits. Enter the Republicans.
Republicans have never been defenders of Medicare generally, and if some had their druthers, they’d replace it with a privatized insurance system. But the proposed cuts in MA have given them an opening to claim they’re trying to protect seniors from Medicare cuts. It’s a lie.
During the Senate Finance Committee hearings yesterday, Senator Crapo questioned CBO’s Doug Elmendorf on the MA cuts. Elmendorf gave extended answers, which Republicans then cropped in a video. They then claimed Elmendorf said that the MA cuts will cut Medicare benefits by about half. AP then picked up that point and CBS repeated it under the headline, "Congress Budget Chief Contradicts Obama."
If you view the full C-SPAN video (at about 5:08 p.m. Eastern), it’s clear that Elmendorf was not talking about reducing basic Medicare benefits, because those benefits must be provided by law. Again, benefits provided under Medicare will not be cut.
What Elmendorff was saying was that some MA providers use their subsidies to offer additional benefits not covered by Medicare — e.g., dental or vision care. If insurers have to compete to be the MA provider, and their subsidies are reduced, they may offer less coverage for these extra benefits beyond what Medicare guarantees.
But that nuance was lost; Orrin Hatch and other Republicans on the Committee then repeated the misleading version all day long, claiming that CBO said that the MA cuts would reduce Medicare benefits, even though Elmendord did not say that. And today, Senator Crapo pressed the matter, only this time, Elmendorf wasn’t there but a Staff expert was. Oops.
Ignoring Crapo’s leading questions, ths Staff expert patiently explained that as the auctions kick in to pick MA providers, the more efficient MA providers in some areas will be able to offer more of these extra benefits that some Medicare folks get today via MA, while less efficient MA providers in other areas may reduce coverage for extra benefits. But everyone will get at least the full complement of required Medicare benefits, because that’s what the law requires.
You can expect Fox News and Lazy Cable/Network News shows to replay the cropped Elmendorf video, following by right-wing statements that CBO said the MA cuts will cut Medicare benefits in half. The claim is false, and the Republicans know it. But that won’t keep the media from repeating it, over and over.