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FACT: Affordable Care Act Strengthened Medicare; No Benefits Cut, But Seniors Are Enjoying New Ones

January 31, 2012

Ignoring numerous independent analysis including from the the AARP proving them wrong, Republicans continue to falsely claim Democrats cut Medicare’s guaranteed benefits by supporting health care reform.

The fact is, Affordable Care Act did not cut guaranteed benefits for seniors … period.  What the new health law did cut, as part of its efforts to rein in waste and abuse in the system, was billions of dollars in wasteful in subsidies to private insurance companies that offer the so-called Medicare Advantage program, a program which needlessly and inefficiently reinvents the Medicare wheel at the expense of all beneficiaries.   As the Economic Policy Institute summarized before the ACA became law: “In a nut shell, Medicare Advantage plans are private plans funded through Medicare to provide similar benefits, but at a 14% higher cost on average, according to the Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency. Eliminating these overpayments would free up $157 billion over 10 years, a substantial down payment on health care reform.” 

 And as Center on Budget and Policy Priorities noted in a 2009 report: “The overpayments, which have totaled nearly $44 billion between 2004 and 2008, average more than $1,100 for each beneficiary enrolled in a private plan. By increasing Medicare costs, these overpayments also drive up premiums for beneficiaries in traditional Medicare by $86 per year for a couple, according to the chief actuary at the Centers for Medicare and Medicaid Services. More than 31 million seniors and people with disabilities enrolled in regular Medicare are forced to pay higher premiums each month to subsidize these excess payments.’

 By eliminating these wasteful subsidies to the private insurance industry, Medicare is today stronger than it has ever been before.  Not only did the health law strengthen Medicare’s solvency by 12 years and not only do Medicare beneficiaries still have all the same guaranteed benefits they’ve always had, but seniors now have NEW benefits like free preventive care services and tens of thousands of enrollees who fall into the infamous Part D “donut hole” are saving an average of $800 per person thanks to a new 50-percent discount on covered brand-name drugs.  And thanks to the Affordable Care Act, billions of dollars in waste, fraud and abuse in the system is getting tackled in a serious way – you may have see this recent headline: “In 'Largest-Ever' Bust, Medicare Fraud Task Force Arrests 111’      SEE FACT SHEET: “The Affordable Care Act strengthens Medicare and helps seniors take charge of their health” [HealthCare.gov]

 And the fact is, far from their campaign promises to protect Medicare, all but 5 House Republicans and 40 Senate Republicans voted to shred the cherished social contract with seniors and dramatically shortchange them on their care.  As The Economist put it, the GOP “plan ends the guarantee that all American seniors will have health insurance.”  

 The fact is, all but 5 House Republicans and 40 Senate Republicans voted to replace Medicare with a voucher system where seniors in their 60s, 70s, 80s and older are given a coupon and sent out into the private insurance market – a coupon that won’t keep up with the rising costs of health care and will leave seniors paying over $6,000 more out of their pockets for care.   Not stopping there, the Republican plan would also slash $1.4 trillion from Medicaid, leaving up to 44 million Americans uninsured, including most nursing home residents, as well as disabled people of any age.  And despite Republican claims to the contrary, not even today’s seniors would escape cuts in their Medicare benefits under the GOP plan as it would repeal provisions in the new health law that are working to fill in the Part D “donut hole” and help seniors pay for the medicines they need. In fact, under the GOP plan, next year alone, seniors currently in the donut hole would pay an additional $2.2 Billion for their Rx drugs.