Obama Stiffs Poor and Minority Seniors

One of Barack Obama's most frequently repeated campaign promises was that his health care reforms would allow Americans to keep their current insurance coverage if they so desired. Like much of his campaign rhetoric, however, that pledge turns out to have been disingenuous. Last week, White House Budget Director Peter Orszag reiterated the administration's commitment to budget cuts that will force 10 million seniors off their Medicare Advantage (MA) plans and back to the more expensive and less comprehensive coverage of traditional Medicare. The Obama administration and its shills in the "news" media have been spinning this policy as a long-overdue comeuppance for the health insurance industry, but the real victims will be poor and minority seniors.

MA is an alternative health coverage vehicle created for seniors as part of the Bush administration's market-based Medicare reforms. These reforms, collectively known as the Medicare Modernization Act of 2003, established a system in which private health care plans compete with one another to provide Medicare and drug coverage to seniors. This competition was intended to put downward pressure on health care costs and it was beginning to work, particularly in the area of prescription drugs. As early as 2007, the Washington Post was forced to admit that "the new Medicare drug benefit appears to be slowing the growth in national spending on prescription medicines because the drug plans are negotiating lower prices with drug companies."

The Democrats have, predictably, been gunning for Medicare Advantage since they retook Congress in 2006. They see MA, with its emphasis on the free market and patient choice, as a threat to their plans for a government-run health care system. Thus, shortly after returning to power, they tried to use expansion of the State Children's Health Insurance Program as a pretext for killing the program. The public was told that we had to choose between "the kids" and the insurance companies. When that fraud failed to produce results, they hit upon the more efficacious strategy of attaching a physician payment increase to a bill that would cut funding for Medicare Advantage. This allowed the Dems to co-opt the AMA, with whose help they successfully pushed through modest reductions in the program.

An enthusiastic participant in this travesty was the Senator from Illinois, Barack Obama. And, now that the voters have been foolish enough to put him in the White House, Obama plans to deliver the coup de gras to MA. This is ironic in the extreme considering that the loss of the program will be most acutely felt by low-income and minority seniors. Medicare Advantage is very popular with these patients because of its reduced co-pays, comprehensive benefits, and increased primary care access. According to the Centers for Medicare & Medicaid Services (CMS), nearly 60% of MA beneficiaries have annual incomes of $10,000 to $30,000. Moreover, nearly 30% of Medicare Advantage enrollees are minorities, compared to about 20% for traditional Medicare.

And it gets worse. One of our most under-reported health care crises involves the increasing difficulty that seniors face in accessing primary care. Even without the planned payment cuts that have long been built into the CMS budget, traditional Medicare pays such a small amount for routine medical services that doctors increasingly cannot afford to take on seniors covered by that program. This problem is particularly acute in rural areas, where Medicare beneficiaries vastly outnumber those with private or employer-sponsored health coverage. MA increased primary care access because its slightly better payment schedule makes it just possible for primary care physicians to accept new Medicare patients without going bankrupt.

Unmoved by such concerns, the President summed up his ostensible motive for killing MA in a January interview with former Clinton lickspittle, George Stephanopolous: "We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage ... And if we eliminate that and other programs, we can potentially save $200 billion ..." In other words, he merely wants to decrease "overpayments" to avaricious insurance executives. This is deeply dishonest. Obama knows perfectly well that he can't save any significant amount by cutting Medicare Advantage. Despite the endlessly repeatedly canard that MA costs 12% more than traditional Medicare, CMS estimates that the plans are paid only 2.8 percent more, and numerous studies have shown that this goes to patients in the form of additional benefits.

Nonetheless, the administration is sticking to its claim the Medicare Advantage is too expensive. In fact, Orszag is now asserting that MA costs 30 percent more than traditional Medicare. Even if such wildly exaggerated cost estimates were accurate, how can anyone take the Obama administration or congressional Democrats seriously as cost conscious stewards of the public coffers? These are the authors of the notorious American Recovery and Reinvestment Act, the "Porkulus" bill that not only includes breathtaking expenditures for more than 9,000 pork-barrel projects but expands the State Children's Health Insurance Program to cover adults while providing every doctor in America with $50,000 to install electronic medical records. We're expected to believe that these people are worried about wasting money?

The real agenda behind the demise of MA involves the desire of Obama and his congressional accomplices to undo the market-based reforms enacted by the Bush administration. If they allow free market reform to significantly slow health care inflation while actually increasing the benefits available to seniors, their primary justification for imposing socialized medicine on the country will have been proven false. This, in turn, would rob Obama & Co. of an opportunity to exponentially increase their control over our wealth and lives. And, make no mistake about it, that's what their health care "reform" project is really about-the acquisition of more and more money and power.

So, Medicare Advantage has to go, regardless of the harm done to low-income and minority seniors. The White House Budget Director has strict orders to pull the plug. If low-income seniors must pay higher Medicare deductibles, that's the breaks. If they have fewer health benefits, oh well. If rural seniors must watch helplessly as their access to primary care disappears, c'est la vie. They'll just have to face the fact that "change has come."

David Catron is a health care finance professional who has spent more than twenty years working for and advising hospitals and medical practices. He blogs at Health Care BS.
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