Will Health Reform Cut Medicare Benefits?

Democrats say they'll slash spending from Medicare without reducing benefits, trimming wasteful spending from the program without reducing seniors' coverage. Republicans say President Obama's Medicare spending cuts would hurt seniors (in fact, the National Republican Congressional Committee just launched ads against three House Democrats today alleging that the projected Medicare spending cuts--projected at $500 billion by sources with knowledge of Senate Finance Committee talks--would pay for health care reform "on the backs of America's senior citizens.") AARP agrees with the Democrats. Who is right?


I asked the NRCC why they say Medicare cuts will put seniors' health coverage at risk; they pointed me to PolitiFact.com, which gives Obama a "half true" on his claim that "we're not talking about cutting Medicare benefits." PolitiFact sums it up thusly:

He's right that the bill does not directly trim Medicare benefits; instead, the government is proposing ways to slow or eliminate some Medicare spending to beef up other aspects of the plan. But experts told us it's conceivable or even likely that those financial changes could lead to reduced benefits, particularly for people in the Advantage program. From that perspective, it's a stretch for Obama say that Medicare patients won't see changes in their plans as a result. We give Obama a Half True.

The spending cuts will come in payment rates and subsidies to private insurers in Medicare Advantage, the private-coverage form of Medicare. Medicare Advantage already costs taxpayers more than regular Medicare does, but plans that don't closely resemble traditional medicare--insurance plans in the program "to make a quick buck," Marc Steinberg of Families USA told Politifact--may have to change some benefits. The House proposal cuts the growth in payment rates, and there's a fear that this will trickle down in the form of fewer benefits or worse coverage.

So saying Obama will cut Medicare, as Republicans do and Democrats & the AARP don't, is about a fear that slowing the growth of payment rates and cuts to Medicare Advantage will end up resulting in fewer benefits.

Obama is right: no one is talking about cutting Medicare benefits, at least directly. But the GOP is talking about that eventually happening somewhere down the line, as doctors and hospitals keep getting paid the same amount.