A BETTER WAY FORWARD
Obamacare Cuts Benefits for Seniors
Today, about 12 million seniors (25 percent of Medicare beneficiaries) are enrolled in Medicare Advantage plans,[1] which are the private insurance options in Medicare. Obamacare imposes deep cuts in payment in Medicare Advantage plans. In total, these cuts will reach $145 billion over a decade,[2] and the human impact of those cuts will be severe:
- These cuts will reduce benefits for seniors enrolled in Medicare Advantage plans by an average of $3,700 per person in 2017, or 27 percent below what they would have gotten in that year if Obamacare had not been enacted.[3] (To put that in perspective, seniors losing $3,700 per year from enrollment in Medicare at 65 until their deaths at age 77 or 78 would lose about $44,000 in benefits over their lifetimes, all because of Obamacare’s cuts.)
- The cuts will force the Medicare Advantage plans to cut back on the benefits they offer and to charge higher cost-sharing for the services they do cover.
- Some seniors will be pushed out of Medicare Advantage entirely and forced back into the traditional program.
- At the state level, the average cut ranges from $2,020 (21 percent) in Nevada, the state with the smallest cut on a per capita basis, to $4,693 (36 percent) in Hawaii, the state with the highest reduction in the per-capita value of Medicare Advantage-covered benefits.[4]
- The chief actuary for Medicare had projected that enrollment would have grown from 10 million to 14.8 million in 2017 without Obamacare. Instead, Obamacare will cause Medicare Advantage enrollment to fall to just 7.4 million in 2017.[5]
- Millions of seniors and disabled Americans are being forced out of plans they prefer today into the government-managed fee-for-service Medicare.
- Hispanic Americans are twice as likely, and African Americans are 10 percent more likely, to be enrolled in Medicare Advantage plans than the average Medicare beneficiary.[6]
- Lower-income seniors who cannot afford Medigap premiums sign up for Medicare Advantage plans in large numbers.[7]
[1] 2012 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and the Federal Supplementary Medical Insurance Trust Funds, p. 180, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/downloads/tr2012.pdf.
[2] Richard S. Foster, “Estimated Financial Effects of the ‘Patient Protection and Affordable Care Act,’ as Amended,” Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010, http://www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf.
[3] Robert Book and James C. Capretta, “Reductions in Medicare Advantage Payments: The Impact on Seniors by Region,” The Heritage Foundation, September 14, 2010, http://www.heritage.org/research/reports/2010/09/reductions-in-medicare-advantage-payments-the-impact-on-seniors-by-region.
[4] Robert Book and James C. Capretta, “Reductions in Medicare Advantage Payments: The Impact on Seniors by Region,” The Heritage Foundation, September 14, 2010, http://www.heritage.org/research/reports/2010/09/reductions-in-medicare-advantage-payments-the-impact-on-seniors-by-region.
[5] Richard S. Foster, “Estimated Financial Effects of the ‘Patient Protection and Affordable Care Act,’ as Amended,” Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010, http://www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf.
[6] Center for Policy and Research, America’s Health Insurance Plans, “Low-Income and Minority Beneficiaries in Medicare Advantage Plans, 2006,”, Table 6B, September 2008, http://www.ahipresearch.org/pdfs/MALowIncomeReport2008.pdf.
[7] Center for Policy and Research, America’s Health Insurance Plans, “Low-Income and Minority Beneficiaries in Medicare Advantage Plans, 2006,”, Table 6B, September 2008, http://www.ahipresearch.org/pdfs/MALowIncomeReport2008.pdf.
