Republicans are happy to suggest that their demand for unspecified spending cuts, which have been set as a condition for raising the national debt ceiling, means they are actually going after Medicare and Social Security.
You can see it clearly last week, during the State of the Union address, when President Joe Biden mentioned that some Republicans are calling for cuts to these two entitlement programs. Many Republicans shouted at Biden, calling him a liar ― an accuse they have been repeated in countless opinion articles, speeches and interviews both before and since.
I have paid special attention to the debate over Medicare because I cover health care. I have not seen polls on the question of cutting Medicare specifically, so I can not say for sure whether the Republican protests are played well with the public.
But my hunch is no, given the intensity of the GOP backlash — and the new arguments they’re trying now. He says it’s the Democrats who are trying to cut Medicare, not the Republicans.
It started as a talking point among GOP officials, and is now the focus of an ad the National Republican Senate Committee is running against Democrats. (You can see one here if you want.)
If you think the GOP argument sounds like a slightly more sophisticated version of “I’m rubber, you’re glue; whatever I say bounces off me and stays on you,” then you’re not alone.
And if you’re skeptical of that claim, you have good reason.
It’s an Argument About Medicare Advantage
The argument that Republicans are making is actually about Medicare Advantage plans, which are private insurance policies that seniors can choose from instead of traditional government programs.
If you choose one of these plans, the federal government will pay the insurance company that runs the plan. The insurer will pay your medical bills.
And you’ll have plenty of company!
This version of private Medicare plans has been around for decades, but really took off in the mid-2000s. At last count, more than 28 million Americans were in Medicare Advantage plans, about half of the Medicare population. Projections show that number will continue to rise.
It’s a big transformation and a significant victory for conservatives, who have long championed a private alternative to government health insurance — or any government program.
The federal government is constantly recalibrating how it pays for insurance based on performance and financial analysis. Over the years, such analyzes have repeatedly provided evidence that the government is paying too much, because the plan is given to the beneficiaries.
One reason is the well-documented problem of “upcoding,” where insurers use the payment system to get extra money that’s supposed to compensate them when they take on beneficiaries with worse health. And while there is (some) evidence that Medicare Advantage plans outperform traditional Medicare when it comes to supporting preventive care, there is also evidence—well documented—of this. New York Times article – that they refuse important treatment more often.
The changes to Medicare Advantage payments came from the Department of Health and Human Services, which is currently under the management of the Biden administration. In January, it announced some adjustments that it expects will be possible, on average, to increase the plan by 1% per patient by 2024.
And now we get to the first big dispute.
It’s an Argument About Paying into the Plan
The organization is called Better Medicare Alliance has commissioned its own analysis, from the independent actuarial company Avalere, which has concluded that the proposed payment change actually means 2.27% red.
“We are confident that this proposal will not result in unprecedented cuts to Medicare Advantage for the elderly and those with disabilities,” Mary Beth Donahue, president of the Alliance, told me there.
Don’t worry, readers, I’m not going to litigate that dispute here. It’s a highly technical argument involving benchmarks, risk scores and (have your eyes glazed over yet?) regional adjustments.
This is what I can tell you.
Avarere is a respected company with many respected analysts. It also contracts for the alliance, whose members include CVS/Aetna, Humana and UnitedHealth, three of the largest sellers of Medicare Advantage plans. Humana and UnitedHealth alone account for nearly half the market.
(Donahue confirmed that more than half of the alliance’s funding comes from insurance plans.)
Whether the administration’s proposed changes would be a 1% increase, a 2.27% decrease or somewhere in between, there is a separate question as to whether the changes result in a change in benefits. The alliance says it will — if insurers make less money, they will likely reduce the benefits the plans offer.
In practice, that most likely means cutting back on some of the extra benefits in Medicare Advantage plans, such as routine vision or dental coverage, that traditional Medicare doesn’t cover. These benefits are what made Medicare Advantage so appealing in the first place.
“This policy change adds an average of $540 in new costs to beneficiaries next year,” Donahue said, citing figures from an Avalere analysis. “This is very, very dramatic.”
But many experts are skeptical that plans will reduce the benefits — or reduce them altogether.
“There is not much evidence to show that lower payments to MA necessarily result in lower benefits for beneficiaries or higher premiums,” Richard Kronickan economist at the University of California, San Diego, and one of the leading experts on Medicare Advantage, told me
His opinion is consistent with the opinion of a new brief on the subject of KFF, a California-based nonprofit research and analysis organization focused on health care. KFF short notes that past experience as well as new analysis from nonpartisans Medicare Payment Advisory Commission (MedPac) suggests that plans typically respond to reductions by reducing administrative overhead or profits.
And to be clear, they have a lot of profit to reduce. Medicare Advantage is currently the most profitable business for health insurance.
“The evidence I’ve read is that reductions in payments to Medicare Advantage plans are largely borne by those plans, with lower profits or lower costs,” said Matthew Fiedler, a senior fellow at the Brookings Schaeffer Initiative for Health Policy at the University of Southern California. , to Politifact this week.
Fiedler served in the Obama administration, as did Kronick. And not every expert is a skeptic. Joseph Antos, an economist at the conservative-leaning American Enterprise Institute, told Politifact that the cuts could lead to reduced benefits. But even he didn’t say it would be drastic.
It’s an Argument About the Meaning of ‘Cut’
This kind of debate is common, and not just in health care policy. The industry is constantly fighting with the federal government over how much money it should receive to provide various services.
But this year, routine requests by health insurance companies coincided with GOP leaders’ desperation to downplay (or distract from) examples of Republicans like Sen. Rick Scott (R-Fla.) or at House Republican Study Committee calls firmly for cuts to Medicare.
The GOP’s argument, supported by conservative intellectuals, is that there is a reduction in what the federal government sends to Medicare as a “cut.” And potentially reducing payments to Medicare Advantage or, say, using the government’s negotiating power to reduce what Medicare pays drug companies, is basically the same as raising the eligibility age (as the Republican Study Committee floated) or requiring the program to obtain new congressional authorization. every five years (as Scott suggested).
But there is a difference in the two approaches. What Democrats are proposing is an attempt to manage the program differently, without changing its fundamental commitment to seniors and people with disabilities. “I don’t think it’s an equal change,” Kronick said.
University of Southern California economist Paul Ginsburg has a similar opinion, telling Politifact that the Biden administration’s proposed payment changes are about “running programs better and more efficiently to protect the integrity of the federal funds we use.”
Whether that difference matters to the public is, obviously, a separate question – and depends on how the debate plays out in the coming weeks. White House press secretary Karine Jean-Pierre fielded questions on the topic at a briefing Friday, shortly after Scott clarified that his call to create a federal program to reauthorize every five years does not include Medicare.
You can take that statement as a sign that Scott truly believes that Medicare is sacrosanct and that he treats it as such. Or you can take it as a sign that he feels the political vulnerability of his position – and that the rest of the party knows it.