Health reform fact check: Gutting Medicare

By Cindy House | August 18, 2009 | 7:01 AM

This is the fourth in a series of fact checks examining allegations that have been made on both sides of the aisle about the health care reform plan heading through Congress. Read the complete text of the America’s Affordable Health Choices Act of 2009 here.

THE ALLEGATION: The bill turns Medicare into a “piggy bank” for the new health reforms, cutting benefits and making seniors bear the brunt.

WHAT THE BILL SAYS: Division B of the bill is devoted entirely to Medicare and Medicaid issues, taking up more than half of the bill’s 1,017 pages. Much of this outlines new payment rates
and rules that the Congressional Budget Office estimates would “reduce direct spending by $219 billion” from 2010 to 2019.

Working with pharmaceutical companies, the bill closes the coverage gap between Medicare and prescription drug plans. It also puts into place incentives for promoting efficiency and quality, and it outlines the development of a Center for Comparative Effectiveness Research, which is charged with the evaluation of “health care services and procedures in order to identify the manner in which diseases, disorders, and other health conditions can most effectively and appropriately be prevented, diagnosed, treated, and managed clinically.” The center will be funded through a “fair share per capita amount,” likely an increase in Medicare taxes.

The CBO also estimates that the 10-year cost of the reform bill’s insurance coverage changes would be $1,042 billion. This would be offset by the $219 billion in Medicare savings, as well as a projected $583 billion increase in federal revenue. However, the overall effect would be a budget deficit increase of $239 billion.

THE VERDICT: You need hedge clippers to cut through the legis-speak in this massive section of the bill. But based on the CBO’s analysis, the decreased spending on Medicare as a result of this bill ($219 billion) comes nowhere close to funding all of the bill’s other provisions for health insurance coverage ($1,042 billion). If it’s meant to be a piggy bank, it’s mostly empty.

Whether the Medicare fee and rule adjustments will result in benefit cuts or low-quality care to recipients is unclear. Some services are expanded under the bill — closing the prescription drug plan gap, for instance — and some are cut, such as Medicare Advantage, which is provided by private companies and subsidized by the government. Increased financial incentives for promoting efficiency may raise the risk of fraud by unscrupulous providers who cut corners or fudge their quality-improvement data.

On another subject, privacy advocates may be alarmed by the personal data access the bill gives to the Center for Comparative Effectiveness Research, which “may secure directly from any departmentment or agency of the United States information necessary” to perform its function.

FACT CHECK 1: Euthanasia of the elderly

FACT CHECK 2: Keeping your insurance

FACT CHECK 3: Socialized medicine

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