Almost immediately after releasing an incomplete report on the supposed increase in premiums that the Senate’s health care overhaul bill would trigger, the health insurers’ trade group took to the airwaves with a TV ad claiming the bill would shortchange millions of seniors.
This ad, which is sponsored by America’s Health Insurance Plans, screams for context.
As we’ve written previously, it’s true that about 10 million seniors are on Medicare Advantage, as the ad says, which means they’ve chosen to get their benefits from a private insurer instead of through the fee-for-service route that 78 percent of Medicare recipients use. Those who are in the Advantage programs might pay a little less in premiums or cost-sharing than the majority of Medicare patients, or receive an extra service. It’s also true that the pending health care legislation looks to get a substantial amount of savings from Medicare Advantage – more than $100 billion – by forcing insurers to bid competitively for the right to sign up seniors. The ad doesn’t mention that’s a 10-year figure, however.
The ad also asks whether it’s "right" to ask the seniors on Medicare Advantage "for more than their fair share." But what’s "fair"? Democrats argue that it’s not "fair" for Medicare to be paying an average of 14 percent more for seniors in the Advantage program. That has raised premiums for everyone, according to the Government Accountability Office, which also said that those in Medicare’s regular fee-for-service program "are subsidizing the additional benefits and lower costs that [Medicare Advantage] beneficiaries receive."
How much would the bill hurt seniors in the Advantage program? Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, recently told the Senate Finance Committee that by CBO’s estimates, about 2.7 million fewer seniors would be enrolled in the program in 2019, should the committee’s bill (as introduced) become law, than would be projected to participate if Congress did nothing. The reason? The program wouldn’t be as appealing, because private insurers would have to cut costs and couldn’t provide as much by way of extra benefits to seniors.
The value of those additional benefits would shrink to about $42 per month for Medicare Advantage patients in 2019, on average, or "a little less than half" of what they could expect if the law wasn’t changed, according to Elmendorf.
We don’t like to take out after an ad that is technically accurate, but this one implies that seniors in Medicare Advantage would suffer far more than they actually are likely to under the pending legislation. An on-screen graphic says that they would see a "50 percent reduction in extra benefits." That’s true, but the reality is that even those who leave the program will never receive less in benefits than anyone who is in fee-for-service Medicare, or nearly 80 percent of seniors.
Correction, Oct. 15: We originally identified the head of the Congressional Budget Office as Steve Elmendorf. His name is actually Douglas Elmendorf. We have also streamlined, for clarity only, a paragraph about the value of the benefits that Medicare Advantage recipients would lose.