By Sally C. Pipes
Bad news continues to plague the Obama Administration’s signature achievement — health reform.
Medicare’s Chief Actuary recently projected that the nation’s healthcare bill will increase — not decrease — as a result of the new law. And a separate study from private research firm Avalere Health estimates that more than three million seniors will have to switch drug plans this fall — despite President Obama’s much ballyhooed promise that "If you like your health care plan, you’ll be able to keep your health care plan."
These reports provide only the latest evidence that Obamacare will be disastrous for seniors. Under the terms of the president’s reform package, Medicare will eliminate about 25 percent of the drug plans currently available to seniors in order to "simplify" the system. As a result, roughly one-fifth of the 17.5 million seniors enrolled in stand-alone drug plans could find themselves looking for new drug coverage.
Those who are forced to switch may face higher premiums and co-payments. The drug-plan debacle will be the first of many to befall seniors in the coming years. The Congressional Budget Office estimates that Obamacare will cost about $1 trillion over the next decade. Seniors will end up footing much of that bill, as the law is financed with $575 billion in cuts to Medicare.
Obamacare will extract a big chunk of that — $202 billion, according to the Centers for Medicare and Medicaid Services — from Medicare Advantage (MA). Nearly a quarter of Medicare patients participate in this popular program, whereby the federal government partners with private insurers to deliver health benefits. Between 2003 and 2009, enrollment in the program doubled, from 5.3 million to 10.2 million.
But under Obamacare, enrollment in Medicare Advantage is projected to decline 50 percent by 2017, largely because of cuts in the level of benefits provided by the program. Some 10 million MA patients could see their benefits gradually decrease by an average of $43 a month.
MA beneficiaries won’t be the only ones under assault thanks to Obamacare. Seniors covered by traditional Medicare will find it harder to get the care they need, as the health reform law cuts payments to all manner of healthcare providers. Medicare Chief Actuary Richard Foster predicts that nearly one in seven hospitals, nursing homes, hospices, and home health agencies will become unprofitable by 2019. Two-fifths could be forced out of business by 2050.
Obamacare’s cuts could also force doctors to shutter their practices. Already, the government reimburses physicians who treat Medicare patients at less than cost. Because they lose money on every Medicare patient they see, more and more doctors are simply refusing to see seniors. Nearly a quarter of Medicare patients seeking a primary care doctor have trouble finding one, according to a report released earlier this year by the independent Medicare Payment Advisory Commission. The Texas Medical Association surveyed doctors a couple years ago and discovered that just 38 percent of primary care doctors took new Medicare patients. By cutting reimbursement rates further, Obamacare will only exacerbate this unfortunate trend — and indirectly ration care.
The health reform law provides for the direct rationing of care, too. Obamacare creates an Independent Payment Advisory Board, which will advise Congress on how to reduce Medicare spending if it’s growing too fast. The president will appoint the 15 members on the panel, and none will be required to represent the interests of the seniors whose lives will be affected by its decisions.
The panel isn’t supposed to raise taxes, change benefits, or ration care. But how else will it reduce spending? If the board recommends more cuts in payments to doctors and other providers, for instance, Medicare patients will have no choice but to wait longer for care.
Obamacare guts Medicare right as the baby boomers are set to swell its ranks. In just the next five years, another 7 million people will become eligible for the program. Medicare was designed to provide a safety net for America’s seniors. But Obamacare threatens to shred that net and consign our aging population to long waits and substandard care.
Sally C. Pipes is President and CEO of the Pacific Research Institute. Her latest book, The Truth About Obamacare (Regnery 2010), was just released.