Advocacy / AMAC On Capitol Hill / Politics

Health Subcommittee Examines the Future of Medicare Advantage

By – Caroline Rayburn

On Thursday, July 24th, the House Ways and Means Health Subcommittee examined an issue of direct importance to AMAC members.  The hearing, entitled, “The Future of Medicare Advantage Health Plans,” focused on the impact the Affordable Care Act (ACA) – ObamaCare – will likely have on the Medicare Advantage (MA) program in the coming years.  It is no secret that ObamaCare cut $308 billion from MA to fund the expansion of Medicaid and to establish health exchanges; however, the consequences of these cuts have yet to be fully realized and experienced by MA beneficiaries.

AMAC made sure to weigh in on this important discussion of direct relevance to many AMAC members.  AMAC’s letter of concern, which expressed our thoughts regarding both ObamaCare and Medicare Advantage and the urgent need to protect MA from further encroachment by the federal government, was entered into the Congressional Record and included in the take-home literature that was administered to hearing attendees.  AMAC’s letter to the Health Subcommittee is available on our website.

In his opening remarks, Subcommittee Chairman Kevin Brady (R-TX) asked two important questions: “When the scheduled cuts to Medicare Advantage plans in the Affordable Care Act take place, can these popular plans continue to effectively serve seniors?  Will the policies of the Obama Administration narrow choice and plan flexibility, further impacting our seniors?.”  These questions are significant because 16 million individuals have elected to receive their Medicare benefit via Medicare Advantage due to the many choices available to them based on their individual health needs.  Despite seniors’ “strong preferences for these private plans, the difficult reality is 2015 is now upon us and millions of seniors who rely on the Medicare Advantage program may be in jeopardy of losing their plan, their doctor, and the financial protection and benefits they have chosen,” the Chairman stated.

Three of the four witnesses that testified before the Subcommittee agreed with the Chairman’s grim assessment of the future of Medicare Advantage.  In fact, Chris Wing, CEO of SCAN Health Plans, indicated that “some seniors have already begun to feel the negative impacts of these [ACA] cuts,” referring to higher out-of-pocket payments and tighter provider networks.  Still, the witnesses and Subcommittee members of the Majority underscored that MA beneficiaries won’t see drastic changes until 2015 – due to how the Centers for Medicare and Medicaid Services (CMS) has used its regulatory authority to obscure the cuts.

Republicans on the Subcommittee expressed their outrage over how the Obama Administration and CMS have “masked” the cuts to Medicare Advantage this year by granting increased bonuses to plan providers just for this year.  Republicans strongly feel that this is a political ploy to pacify senior voters ahead of the midterm elections in November.  Articulating his disdain for these cuts and the deceptive political maneuver by CMS, Rep. Sam Johnson stated, “I’m ashamed this Administration is decimating Medicare Advantage to pay for ObamaCare.”

Witnesses touted the undeniable success of the MA program – a program that has helped to decrease unwanted, expensive hospital readmissions, has empowered beneficiaries to choose coverage based on their individual health needs, and has contained costs for consumers.  In his testimony, Dr. Robert Book, a health economist at the American Action Forum and Senior Research Director at Health Systems Innovation Network, LLC, quantified the magnitude of the MA benefit cut as a result of ObamaCare:

Based on published rates for each county, as well as enrollment data reported by CMS, I have calculated that the average MA enrollee will face a reduction in benefits in 2015 of about $317, or about 3 percent, compared to the year before.  However, the total cut for 2015 relative to the pre-ACA baseline is estimated to be in excess of $1,530, or more than 13 percent. This demonstrates the extent to which CMS regulatory action offset the ACA’s cuts for 2014.  Because the ACA calls for the new rates to be phased in through 2017, there are more cuts to come.  The average reduction in benefits for 2017, relative to the pre-ACA baseline, is over $3,700 per beneficiary, per year, or nearly 27 percent.[1]

What does this mean for MA beneficiaries?  According to Dr. Book,

Every beneficiary will experience some combination of higher copayments, higher deductibles, a higher premium in excess of the Part B premium, reduced benefits or plan services, and/or smaller provider networks.  These are real impacts that will affect not only seniors’ financial stability, but also their access to health care itself.[2]

Despite the disconcerting projections and expectations for the future of Medicare Advantage, Subcommittee Democrats insisted that seniors shouldn’t be troubled by Republicans’ “scare tactics.”  In fact, Ranking Member of the Subcommittee, Dr. Jim McDermott (D-WA), said, “The ACA has put Medicare and Medicare Advantage on more sound footing.”  By cutting down on MA overpayments and improving how payment rates are calculated, Rep. McDermott insisted that beneficiaries will continue to have access to a number of MA plans under the ACA.  However, witness Joe Baker, President of Medicare Rights Center, emphasized that “simplifying and standardizing plan products” should be Congress’ goal.  Baker stated that the Medicare Rights Center has found that “consumers are paralyzed by even by 10 or 15 plans choices…  We find they’re not able to make an intelligent choice.”

Still, Republican lawmakers insisted that maintaining the overwhelming success and popularity of the program depends on maintaining choice for individuals.  However, ObamaCare will seriously impede MA’s ability to do this.  Again, Chairman Brady committed the Subcommittee to monitoring the repercussions of the ObamaCare cuts on MA, stating, “the ACA brings [a] new level of uncertainty to those who depend on Medicare Advantage, [but] this Subcommittee will hold the Administration accountable to carefully examine the impact that any changes to Medicare health plans will have on seniors, the Medicare program, and ultimately to taxpayers.”[3]

Like the Subcommittee, AMAC will continue to keep our members informed of any changes to the Medicare Advantage program.  While we will keep working to protect this vital program, it is important to continue emphasizing seniors’ satisfaction with their plans and to hold the Obama Administration to its promise that said, “If you like your health care plan, you can keep your health care plan.”

 

[1] Book, Dr. Robert. “Effects of the Affordable Care Act’s Changes to the Medicare Advantage Program.” U.S. House of Representatives: House Ways and Means, Subcommittee on Health. July 24, 2014. Page 4. http://waysandmeans.house.gov/uploadedfiles/072414_book_testimony_final_hl.pdf.

[2] Ibid.

[3] Brady, Rep. Kevin. “Brady Opening Statement: Hearing on Future of Medicare Advantage Plans.” July 24, 2014. http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=389072.

 

 

July 24th, 2014

Washington, DC 20515                                                                                            Washngton D.C 20515
The Honorable Kevin Brady                                                                                     The Honorable Jim McDermott
8th District, Texas                                                                                                    7th District, Washington
301 Cannon House Office Building                                                                          1035 Longworth House Office

Dear Chairman Brady and Ranking Member McDermott,

On behalf of the 1.2 million members of AMAC, the Association of Mature American Citizens, I am writing to express both our thoughts and concerns regarding the future of the Medicare Advantage (MA) program in light of the Patient Protection and Affordable Care Act’s (PPACA), known more commonly as “ObamaCare,” cuts to this value-based program.

Medicare Advantage is a popular, market-based alternative to traditional Medicare that enables individuals to receive their benefits through local and regional private insurance companies.  MA plans are specifically designed to offer beneficiaries greater choice and coordinated care at a lower out-of-pocket rate.  In fact, MA has a proven record of positive patient outcomes – reducing the need for expensive hospital readmissions, while simultaneously containing costs for consumers.

Despite the program’s overwhelming success and popularity among beneficiaries, however, ObamaCare cut $308 billion from Medicare Advantage to fund the expansion of Medicaid and the health care subsidies.  With 16 million seniors currently enrolled in Medicare Advantage plans, experts at the Kaiser Family Foundation project that hundreds of thousands of MA beneficiaries will be forced off the plans that the Obama Administration and Democrats in Congress told them they could keep.

The consequences of these cuts will be devastating for many seniors.  Beneficiaries will have fewer plan choices available to them, plan costs will be higher, and networks will be considerably smaller.  Sadly, low-income beneficiaries residing in rural areas will likely be hit hardest as a result of the ObamaCare cuts.  AMAC believes the cuts to MA fundamentally undermine the ability of seniors to choose health coverage based on their individual needs and preferences – exacerbating the problem of one-size-fits-all health care in America.

AMAC commends the House Ways and Means Health Subcommittee for addressing these troubling concerns in a hearing entitled, “The Future of Medicare Advantage Plans.”  As the Subcommittee looks to address these challenges in the coming weeks and months, AMAC will continue to advocate on behalf of the millions of seniors who prefer to receive their Medicare benefit via Medicare Advantage and to expose the true, harmful nature of ObamaCare’s cuts to this program.  AMAC appreciates your attention to these important matters and looks forward to engaging with the Subcommittee on these concerns in the future

Sincerely,
Dan Weber
President and Founder of AMAC

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David Yacker
5 years ago

Obviously I am not a member, and still too young for the Medicare program. I have no complaint about paying payroll taxes to support Medicare, but I do object to the system paying insurers more for MA than they would via standard Medicare. If someone chooses to go with a private insurer at a higher cost, they should bear the additional cost themselves.

George Guilmet
5 years ago

As a new member I want to thank AMAC for its efforts in supporting Medicare Advantage. President Obama claims that the cost of these plans to the government is too high but as you state the truth is he is robbing the Peter of Med Advantage to pay the Paul of Medicaid. If a private insurer can provide me much better benefits than regular Medicare at no additional cost to me other than my Part B premiums this is a good thing for the 16 million who avail themselves of these plans. It also makes it much more affordable to… Read more »

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