WASHINGTON — Medicare is looking like a big fat piggy bank for health care overhaul.
President Barack Obama and the Democrats want to pay for much of their plan to cover the uninsured by cutting hundreds of billions from the Medicare budget over the next 10 years.
Here are some questions and answers on how the health care overhaul would affect Medicare beneficiaries:
Q: Obama says no one is talking about cutting Medicare benefits, is he mistaken?
A: He might want to add a caveat. Benefits under traditional Medicare won’t be cut. But seniors who’ve signed up for private insurance plans through Medicare Advantage could lose valuable extra benefits, according to the Congressional Budget Office.
For years, the government has been paying the private plans more than it costs traditional Medicare to deliver similar services. The plans used the money to provide extra benefits — mainly lower copayments and deductibles. Seniors on tight budgets responded by signing up, and now nearly one-fourth of Medicare recipients are in private plans.
As Obama and the Democrats wean private plans off their subsidies, beneficiaries will suffer the consequences.
“They are likely to see higher out-of-pocket costs, and it’s likely that some plans will drop out of the program,” said Robert Berenson, a physician turned Medicare expert at the Urban Institute public policy center. On the other hand, everyone on Medicare will save a little on their monthly premiums as payments to private plans are scaled back.
Q: How extensive are these cuts?
A: In dollar amounts, they’re huge. They appear more manageable when viewed as a share of overall Medicare spending.
After accounting for proposed Medicare improvements, the House plan would reduce net spending on the program by $218 billion over 10 years, according to an analysis by the Kaiser Family Foundation.
The Senate Finance Committee proposal would decrease net spending by $377 billion over the same period.
Kaiser found that the House cuts amount to 3 percent of projected Medicare spending from 2010-2019, while the Senate reductions are about 5 percent.
Research indicates that as much as 30 percent of Medicare spending goes for services that are of questionable value to patients.
Q: With all these cuts, how can Obama claim he’s improving benefits?
A: By offering cheaper prescription drugs.
Under a deal with the White House, drugmakers would offer a 50 percent discount on brand-name prescriptions for beneficiaries who fall into the “doughnut hole,” the notorious Medicare coverage gap.
Coverage for preventive care would also get better. The House and Senate bills eliminate copayments and deductibles for prevention. The House also would increase subsidies to help low-income seniors.
Ricardo Alonso-Zaldivar, The Associated Press
