I received an email this morning from Jim Messina, the President’s campaign manager, accusing Paul Ryan of lying in his acceptance speech last night. “He lied about Medicare. He lied about the Recovery Act. He lied about the deficit and debt. He even dishonestly attacked Barack Obama for the closing of a GM plant in his hometown of Janesville, Wisconsin — a plant that closed in December 2008 under George W. Bush.”
I write about health policy, so I’m not going to comment on all the accusations, but I will say this about the Janesville plant closing. President Obama visited that plant during his 2008 campaign. During that visit the President said: “I believe that if our government is there to support you. . . this plant will be here for another hundred years.” Ryan’s comment: “Well, as it turned out, that plant didn’t last another year. It is locked up and empty to this day.” Yes, the plant was scheduled for closure during the Bush administration, but I believe the point was not to blame President Obama for its closure, but to point out that promises are easy to make, but hard to keep. And one of the themes of the speech was that we shouldn’t judge someone by their promises, but by their actions. By the way, the Wikipedia account of the plant closing has already been edited to clarify the actual sequence of events.
Now let’s focus on the Medicare “lie.” Ryan referred to the Affordable Care Act (out of concern for all those leftist pundits who are stroking out because they see racism in certain code words, I’ll refrain from calling the ACA, Obamacare) as the “coldest power play of all [coming] at the expense of the elderly.” He went on to explain that “the planners in Washington … didn’t have enough money…. So, they just took it all away from Medicare.” Ryan is referring to estimated $716 billion that is removed from Medicare to fund the expansion of Medicaid and the state exchange subsidies in the new law. He concludes the Medicare portion of his speech by saying, “The greatest threat to Medicare is Obamacare.”
I’m assuming that the last statement is the “lie” that Messina is talking about. So to what extent does the ACA threaten Medicare? The obvious threat is the one to Medicare Advantage. About 25% of the cut comes out of the Medicare Advantage program. As a result the CBO estimates that about half of its enrollees will be forced out of the program and back into traditional Medicare. It’s fair to ask the seniors who will lose their insurance of choice and are forced back into traditional Medicare whether or not that’s a threat.
Possibly the biggest threat to the program comes as a result of the creation of the Independent Payment Advisory Board (IPAB) and its control over payment rates to providers. As I said in an earlier post (“The Obama Medicare Reform Plan,” August 24, 2012) if historical growth rates prevail into the future, using the ACA formula, spending on physicians’ services will have to be reduced by almost 5% annually. Ignoring the obvious threat to provider incomes, how are these spending cuts a threat to Medicare? The obvious answer, they will affect patient access to medical services.
The Affordable Care Act was about giving people access to health insurance with little thought to providing access to medical services. Too many physicians do not accept new Medicare patients now. How will payment cuts affect future access? How will the Act affect access to hospitals? Only about 12% of all community hospitals make enough on Medicare to cover their expenses. Without the ability to shift costs to privately insured patients, an out-of-date financial model, those who can’t at least break even on Medicare will only accept Medicare patients in emergency situations. Seniors will simply receive their medical care at hospital emergency rooms.
Is this a threat? I’ll let you answer that question.