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Two sides to Medicare reform

By Jennie L. Phipps ·
Tuesday, October 9, 2012
Posted: 4 pm ET

Medicare was a hot issue in last week's presidential debate, with both President Barack Obama and GOP contender former Gov. Mitt Romney arguing for their view of the way to put Medicare on stronger financial footing.

The biggest bone of contention was the $716 billion that Romney repeatedly accused Obama of cutting from Medicare through the Affordable Care Act, which he vowed to repeal on day one of his presidency.

Obama attacked the Romney-Paul Ryan plan to convert Medicare into a "voucher" or premium-support system, in which beneficiaries would receive a set amount of money to be used to purchase insurance in the private market. Obama said running parallel systems -- traditional and a premium-supported system, which Romney has said he would do, would destroy Medicare because private insurers would cherry-pick the healthiest seniors and leave the poorest and sickest in the current form of the program.

So, who is right? Which side will provide the strongest approach for anyone concerned about retirement planning? Here are some insights from Charles Roehrig, an economist and director of Altarum's Center for Sustainable Health Spending, a nonpartisan health care economics think tank.

About one-third of Obama's $716 billion in Medicare cuts comes from a reduction in hospital reimbursement rates. Another third comes from cuts in reimbursements to Part C Medicare Advantage plans. The rest comes from small cuts to various parts of the plan, including a 9 percent decrease in reimbursements to home health providers.

Roehrig says the cuts to hospital reimbursement rates are offset by payments from 30 million previously uninsured people who are now insured under health care reform and able to pay for their treatments. "Hospitals are accepting Medicare payment cuts because they also are seeing a cut in the amount of uncompensated care that they must give," he says.

In the long run, will these cuts make hospitals less likely to accept Medicare patients? Roehrig says no. "I am of the opinion that access to care isn't going to be a major issue. Hospitals are so reliant on Medicare patients that they can't afford to refuse them."

Roehrig sees cuts to Medicare Advantage plans, which are more expensive to operate than traditional Medicare, potentially driving some private insurers that operate them out of the market. "The worst thing is that there would be fewer Medicare Advantage plans and people who were enrolled them would have to go back to standard Medicare," he says. "I think this would be money saved with not that great of an inconvenience to the Medicare population."

Roehrig believes that the main differences between the two contenders' approaches to controlling future Medicare spending are philosophical.

Democrats want to save money by managing payment rates, using government clout to set rates and implement innovation in payment policy.

The Republicans believe giving Medicare recipients less money to spend on Medicare will hold down prices. Private insurers will have an incentive to charge recipients less and insurers will tell hospitals and doctors, "This is all we can afford."

Which approach is best for your retirement? Pick your poison.

"Exchanges and vouchers both can be used to effectively hold down prices if they are fairly applied and not used to create unfair outcomes," Roehrig says. "It is all in how you apply them. Those are the details that we don't know yet."

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1 Comment
October 22, 2012 at 12:33 pm

Jennie, you're article leads the reader to draw completely false conclusion because your clueless expert Roehrig is completely ignorant to the wide array of Medicare Advantage plans, their coverage and what services they offer. It’s absurd to believe, that Roehrig’s conclusion has merit, when he is missing such an essential element of the equation he used to calculate his findings–Medicare Advantage.

Not only is Roehrig's quote: "I think this would be money saved with not that great of an inconvenience to the Medicare population" ridiculous, it completely diminishes his credibility. I became disabled when I was 28 and have participated in Medicare advantage for as long as it has existed. Over the years I have switched insurance carriers numerous times, as coverage has changed and/or the Medicare Advantage Private insurance carrier in which I was enrolled, reduced or eliminated coverage of one of my prescribed procedures, treatments or drugs. Hence, Medicare Advantage has provided me the opportunity to take advantage of the free market to better serve my healthcare needs. Surely Roehrig and President Obama aren’t interesting in hearing this, they despise the fact that not all of us are drones, who’ll settle for “comfort Drugs” in place of treatments which enable us to function in society.
Apparently, Roehrig believes that Medicare provides the same coverage as Medicaid. Medicaid covers almost everything, including 100% the cost of prescription drugs without a co-pay. Medicare alone covers next to nothing; aside from an emergency room visit for which the patient is responsible for the cost of ambulance. Medicare does not cover doctor’s appointments or anything else outside of the Hospital. Medicare Advantage allows patients to make appointments to see physicians. It’s also important to recognize that some doctors do not see patients insured through Medicare Advantage; but far more doctors willingly participate in Medicare Advantage than Medicare. Not to digress, but Medicare Advantage also participant to join the national prescription drug program (as I mentioned earlier drugs a Free for people of Medicare); although it is not my intention to discuss it-I’d like to state that the prescription program was another Govt. debacle, for prior to becoming available during George Bush’s Presidency, almost all carriers in the Medicare Advantage market, offered plans covering prescription drugs for a higher monthly premium.
Basically, the entire system is ridiculous. Medicare and Medicaid were not created to expand and provide services for the number of patients they do today. To make matters worse, rather that stepping back and bringing together real experts and people like me (with actual experience in the system)to fix and replace Medicare , in order for it to survive, the Govt doubles down on the failed, fraud ridden and economically unsustainable Government Healthcare with Obamacare. The FACT is, if not for Obamacare, we’d have little to discuss. I often, if ‘Hacks’ like Roehrig, really understand their wretched lies or are they so blinded by their delusional utopian ideology they are unable to grasp reality? For example, does Roehrig understand that Obamacare has absolutely nothing to do with improving the quality of health or increasing accessibility to healthcare?

Obamacare remains the law of the land, its planned cuts to Medicare Advantage will force many seniors to go back to traditional Medicare at greater expense. The Florida Association of Health Plans found that because Medicare Advantage plans have more benefits and lower co-payments than traditional Medicare does, patients in that state could see their overall Medicare costs rise significantly — from $2,214 to $3,714 a year, depending on the insurance market they are in.