Medicare changes misrepresented, advocates say

Many seniors and doctors who treat Medicare patients have been shaken up by news that health care reform efforts are largely funded by about $455 billion worth of projected savings in the government health insurance program for the elderly.

Enrollees fear that the changes, to be implemented over 10 years, could chip away at their benefits and worry that lower payments will force providers to stop taking new Medicare patients.

"From all I have been able to tell so far, it's going to hurt," said Dalton, Ga., resident Horton Herrin, 72. The retired Georgia state employee has a private Medicare Advantage plan that is targeted for cuts under the health care reform package.

But advocates for Medicare enrollees say many of their concerns are unfounded, although private Medicare Advantage plans will, in fact, see reductions.

"A lot of people are painting these scenarios of future problems, but the good news is most of what we see here is positive," said Joe Baker, president of the Medicare Rights Center, a New York-based advocacy group.

The $500 billion in "cuts" under the health reform package aren't direct hits to the current Medicare budget and include no reductions to traditional Medicare benefits, said Brooks Jackson, director of, a project of the Annenberg Public Policy Center at the University of Pennsylvania.

The cuts come largely from limits to growth in future Medicare spending over the next 10 years and lower government funding of private Medicare Advantage plans, he said.

In the health care debate, the reductions have been inaccurately characterized, Mr. Jackson said.

"Both parties misrepresent this when it suits their purpose. When John McCain proposed almost exactly similar savings in future Medicare spending, candidate Barack Obama ran ads, which we called false, which said (McCain) was proposing cuts in Medicare benefits," Mr. Jackson said.

Cuts to Medicare Advantage plans are designed to bring the expensive plans back in line with the cost of regular Medicare, which would likely result in cuts to the plans' extra benefits such as dental coverage and gym memberships. The plans -- subsidized by the government and sold by private insurers as an alternative to traditional Medicare -- cost the government 14 percent more than traditional Medicare, according to the Medicare Payment Advisory Commission, an independent congressional agency.

Critics say private insurers' profits and spending on marketing and administration costs have eaten up the government money.

Still, the plans would not be cut to less than what traditional Medicare covers, and Advantage plans that cut administrative costs and improve quality would receive bonuses under the health reform bill, Mr. Baker said.

WHAT DOES REFORM DO TO MEDICARE?* Limits future payment increases to hospitals, nursing homes and home health agencies* Cuts funding for private Medicare Advantage program* Gives $250 to Medicare enrollees for the so-called prescription doughnut hole; fills Medicare Part D doughnut hole over 10 years* Boosts payments to primary care physicians* Creates independent commission to recommend how to cut Medicare spending* Offers bonuses to high-quality and efficient Medicare Advantage programs* Funds pilot programs to cut down on waste and root out fraud in MedicareSOURCE: Medicare Rights CenterWHAT IS MEDICARE ADVANTAGE?About 25 percent of seniors, or 10 million people, are in a private Medicare Advantage plan, an alternative to traditional Medicare, according to the Kaiser Family Foundation. The plans can offer added benefits and lower co-pays, but enrollees are subject to restrictions and provider networks of private insurers. The publicly subsidized plans cost the government 14 percent more than traditional Medicare plans.

Many providers are upset that reform legislation does not address the long-standing problem of overhauling the formula that determines doctors' Medicare payment rates. Reform also does not address the most recent Medicare payment cut called for by that formula, a 21 percent reduction to physician payments slated to go into effect in April. Congress will likely again delay the cut.

The reform package boosts prescription drug coverage for seniors by filling the so-called "donut hole" in Medicare Part D, Mr. Baker said. In the donut hole, beneficiaries are exposed to the full cost of their drugs, after they have reached the maximum limit on the Medicare Part D plan and before catastrophic coverage kicks in.

Medicare enrollee Mike Bodine, a retired social services worker at Moccasin Bend Mental Health Institute, said he knows a lot of beneficiaries who are worried about losing their benefits, but he's not one of them.

"I don't feel threatened by the health care bill," said the 65-year-old Chattanooga resident.

If beneficiaries end up having problems with their coverage, he said, those problems could be fixed as reform provisions are implemented over the next decade.

"This is not carved in stone," he said.


The bill does include limits to future increases in Medicare payments to hospitals, nursing homes and home health agencies, Mr. Baker said.

The hospital industry trade group American Hospital Association signed off on those cuts last year, as part of $155 billion the industry committed to support reform.

The sacrifice should pay off if hospitals see fewer uninsured patients who can't pay their bills as a result of the broad expansion of health coverage, Mr. Baker said.

But Dr. Richard Pesce, an intensive care specialist at Memorial Hospital, thinks that calculation is based on an underestimate of how much the cost of care is going to skyrocket, particularly as baby boomers age into the Medicare system and as the unhealthy lifestyles of Americans manifest into costly and complicated chronic diseases.

"It's going to cost everybody a lot more money than they think," he said. "I think the costs of care will continue to increase, the number of people with illness will continue to increase, even though they've covered."

Mr. Jackson said one valid concern is that the savings promised from Medicare changes, which also include assumed reductions in fraud and waste, may never actually materialize. The health reform bill's budget-neutrality is largely based on the assumption that these cuts will go through.

"A legitimate concern here is that these (savings) may turn out to be a fantasy if a future Congress decides these are simply too painful to leave in place," he said.

For Mr. Bodine, tightening up on Medicare to help the uninsured is worthwhile.

"Of the people that don't have health care, I say, 'There but for the grace of God, go I,'" he said.