Why We Still Don’t Know What’s in Obamacare

Why We Still Don’t Know What’s in Obamacare

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Of all the whoppers President Obama has told the American people, perhaps none may   unravel faster than this claim: “If you like your health care plan, you can keep your health care plan.” Already – during this election year – Obamacare was set to whack seniors enrolled in Medicare Advantage (MA), belying this preposterous promise.

Lucky for them, the White House realized that campaign season was no time to pull the rug out from under 12 million Americans depending on the popular program, especially for a president desperate for the senior vote. President Obama is on thin ice. His unpopular health care program is under attack from GOP rivals who claim the signature accomplishment distracted from job creation and economic recovery. Its constitutionality is being reviewed by a skeptical Supreme Court and its credibility continues to be hammered by ever-worsening cost figures. This was no time to clobber Medicare beneficiaries.

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Unfortunately, the other great claim of the Obamacare debate – that we could hand out free health care to 31 million uninsured Americans without deepening our budget deficit – would be upheld almost exclusively by cutting Medicare, and cutting $145 billion from Medicare Advantage in particular. This program, which offers private insurance plans, was enacted in 2003 and costs the government more than traditional Medicare. According to the GAO, in 2011 about one quarter of all Medicare beneficiaries were enrolled in Medicare Advantage, which accounted for some 25 percent of all spending. Obamacare mandated significant cuts to MA, to be phased in over 9 years, reducing the attractiveness of the program and pushing beneficiaries into Medicare instead. The government projected that MA enrollment would be cut in half by the moves. So much for getting to keep the program you like.

Confronting a possible political firestorm, the White House cooked up a clever way to push the MA cuts into the future, leaving existing beneficiaries unscathed and blissfully unaware of the potholes ahead. The administration devised a demonstration project that would extend bonus payments to highly rated plans, postponing proposed reductions.

Welcome to the Medicare Advantage Quality Bonus Payment Demonstration – just what the doctor ordered. The White House enacted this “demonstration” project to purportedly research whether rewarding excellent plans with bonus payments would raise overall quality. But instead of giving out bonuses to only the best performers, it turns out most of the incremental money was funneled to average performing plans, entirely undermining the rationale for the demonstration. 

Unhappily for President Obama, the General Accountability Office has revealed the scheme. In a report to the Senate, the GAO reports that the administration’s efforts to delay dinging MA by enacting the (bogus) “demonstration” program will cost taxpayers $8.35 billion over ten years. More importantly, it would offset “more than one-third of the reductions in MA payments projected to occur.” The study reports that “the largest annual offset will occur in 2012 – 71 percent…” What a shocker – the Band-Aid sticks through election year, and then gets ripped off. In harsh words, the GAO recommends canceling the demo. 

To put into perspective the scale of this sleight-of-hand, the GAO noted that the Bonus Payment Demonstration “dwarfs all other Medicare demonstrations…conducted since 1995 in its estimated budgetary impact…” In fact, the GAO notes, the cost of the demo is “at least seven times larger than that of any other Medicare demonstration conducted since 1995 and is greater than the combined budgetary impact of all those demonstrations.” That’s a pretty big Band-Aid.
An incumbent has to run on his accomplishments. Unfortunately for President Obama, that means campaigning on Obamacare. Revelations that the White House is scurrying to cover up the negative repercussions from the massive health care overhaul should alarm voters. What else is in that bill? Nancy Pelosi was wrong when she said, “We have to pass the bill to know what is in it.” We passed it and we still don’t know what’s in it.

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.