Does Obamacare Require Payment Cuts to Medicare Advantage Plans (Medicare Part C)? – YES
General Reference (not clearly pro or con)
The Patient Protection and Affordable Care Act, Section 3601, page 420, “Protecting and Improving Guaranteed Medicare Benefits,” signed into law on Mar. 23, 2010, available at the Library of Congress website, states:
“(a) PROTECTING GUARANTEED MEDICARE BENEFITS. – Nothing in the provisions of, or amendments made by, this Act shall result in a reduction of guaranteed benefits under title XVIII of the Social Security Act.
(b) ENSURING THAT MEDICARE SAVINGS BENEFIT THE MEDICARE PROGRAM AND MEDICARE BENEFICIARIES. – Savings generated for the Medicare program under title XVIII of the Social Security Act under the provisions of, and amendments made by, this Act shall extend the solvency of the Medicare trust funds, reduce Medicare premiums and other cost-sharing for beneficiaries, and improve or expand guaranteed Medicare benefits and protect access to Medicare providers.
SEC. 3602. NO CUTS IN GUARANTEED BENEFITS.
Nothing in this Act shall result in the reduction or elimination of any benefits guaranteed by law to participants in Medicare Advantage plans.”Mar. 23, 2010 - Patient Protection and Affordable Care Act (HR 3590)
[Editor’s Note: Medicare Advantage payment cuts are described in “Subtitle C—Provisions Relating to Part C” of the Patient Protection and Affordable Care Act.]
The Henry J. Kaiser Family Foundation stated the following in its May 1, 2014 “Medicare Advantage Fact Sheet,” available at kff.org:
“Since the 1970s, Medicare beneficiaries have had the option to receive their Medicare benefits through private health plans, mainly health maintenance organizations (HMOs), as an alternative to the federally administered traditional Medicare program. The Balanced Budget Act (BBA) of 1997 named Medicare’s managed care program ‘Medicare+Choice’ and the Medicare Modernization Act (MMA) of 2003 renamed it ‘Medicare Advantage.’
Over the past decades, Medicare payment policy for plans has shifted from one that produced savings to one that focused more on expanding access to private plans and providing extra benefits to Medicare private plan enrollees. These policy changes resulted in Medicare paying private plans more per enrollee than the cost of care for beneficiaries in traditional Medicare, on average (MedPAC 2010). The Affordable Care Act (ACA) of 2010 produced another shift in payment policy by reducing federal payments to Medicare Advantage plans over time, bringing them closer to the average costs of care under the traditional Medicare program.”
The American Action Forum stated the following in an Apr. 17, 2014 publication written by Robert Book, “Medicare Advantage Cuts in the Affordable Care Act: April 2014 Update,” available at the American Action Forum website:
“[T]he Centers for Medicare and Medicaid Services (CMS) announced payment formulas that will cut payments to Medicare Advantage (MA) Plans in 2015. These include already-scheduled cuts legislated in the Patient Protection and Affordable Care Act (ACA), as well as regulatory decisions that also affect these rates…
Overall, the cuts average about $317, or 3.07 percent, per Medicare Advantage enrollee compared to the rates in effect for 2014. However, after a series of annual cuts, MA enrollees in the next year will face a benefits reduction of about $1,538, or 13.32 percent, below the level projected for 2015 in the pre-ACA baseline…
The ACA cuts to Medicare total $716 billion between 2013 and 2022. A large percentage of the cuts come about through changes to the payment formulas for the MA [Medicare Advantage] program, in which beneficiaries use their Medicare dollars to choose a privately-run health plan that best meets their needs.”
Jason Millman, health policy reporter for The Washington Post, stated the following in his Apr. 7, 2014 article “Obama Administration Reverses Proposed Cut to Medicare Plans,” available at The Washington Post website:
“Medicare pays private insurers more per enrollee than the program pays for seniors under its traditional structure — a gap that the Affordable Care Act aims to eventually close. The president’s health-care law is expected to reduce Medicare Advantage funding by about $156 billion over a decade, according to a 2012 Congressional Budget Office projection. The health insurance industry has sharply criticized program cuts, contending that seniors will see reduced benefits and fewer health care choices as a result.
Medicare Advantage cuts required by the ACA started in 2012, and despite some dire predictions, enrollment in the program increased every year since the ACA was signed in 2010. The ACA’s final cuts to the program are supposed to continue each year until 2017. The average monthly premium in 2014 plans were expected to increase $1.64 to $32.60, the Department of Health and Human Services announced last September.”
Kate Pickert, staff writer for TIME magazine, wrote in her Aug. 16, 2012 article “Fact Check: Obamacare’s Medicare Cuts,” available at TIME‘s Politics website:
“Under the ACA, the federal government will substantially reduce the amount it spends funding Medicare Advantage, which is privately administered insurance offered to Medicare beneficiaries. About one-quarter of Medicare recipients are enrolled in private Medicare Advantage. In theory, these plans are supposed to manage health care spending better than fee-for-service Medicare. But they don’t actually save the federal government any money. They cost, per patient, 14% more than traditional Medicare… The ACA eliminates this subsidy and pegs Medicare Advantage payments to quality metrics.”
John Goodman, PhD, President and Kellye Wright Fellow in Health Care at the National Center for Policy Analysis, wrote in his Aug. 22, 2012 article “Ten Myths in the Medicare Ad Wars,” available at forbes.com:
“[O]ne in four Medicare beneficiaries is in a Medicare Advantage plan. These plans may be overpaid by Medicare, but they are required to ‘spend’ their overpayments on extra benefits for the enrollees. These include extra drug coverage, dental benefits, etc. Over the next 10 years, ObamaCare will reduce spending on these plans by $156 billion.”
John E. McDonough, DPH, Professor of the Practice of Public Health and Director of the Center for Public Health Leadership at the Harvard School of Public Health, wrote in his Aug. 15, 2012 blog entry “Whew! Romney/Ryan Agree on Medicare. Now, Four Questions…” available at Boston.com:
“A big part of the ACA’s Medicare spending reductions involves lowering payments to private insurance companies that participate in Medicare Advantage (also known as Medicare Part C) — $156B between 2013-22.”
[Editor’s Note: Based upon a neutral reading of the Patient Protection and Affordable Care Act and bi-partisan third party analysis, this question seems to have a clear and obvious Pro (yes) answer, and ProCon.org has therefore presented the responses in a single column with no opposing perspective.]