Doubling Down on Obamacare Rationing

by Grace-Marie Turner

Seniors, beware. Buried in the president’s deficit speech this week was a plan to give even more powers to the Medicare rationing board created in his health-overhaul law.

President Obama proposes giving the unelected, unaccountable Independent Payment Advisory Board (IPAB) new authority to tighten the screws on payments. He clearly sees rationing as the tool to control costs by setting “a more ambitious target” for the IPAB ax.

According to a House Budget Committee estimate, the president’s IPAB goals would lead to benefit cuts of $9,600 for seniors over the coming decade. Medicare actuaries have said that the payment cuts already built into Obamacare make it so that Medicare will eventually pay less than Medicaid does today, making it extremely difficult for patients to find doctors who will see them.

Are seniors prepared for this?

The president disingenuously claimed in his speech that seniors would “have to pay nearly $6,400 more than you would today” under Chairman Paul Ryan’s plan to modernize the Medicare program. Since the president offered a speech, not a detailed 73-page plan like Ryan’s, we have to try to figure out what the White House really means. Here’s the best assessment: The Ryan plan, when it begins in the year 2022, would provide an age-adjusted payment so that seniors can pick the best health plan to meet their needs. The older they are, the bigger the payment they would get. The average payment for insurance for all seniors is expected to be about $15,000 a year. But it will be less for seniors when they turn 65 because their health costs will be lower and the expected payment of $8,000 would cover most or all of their premiums.

The White House apparently did simple subtraction between the expected payment for 65-year-olds and the average premium for all seniors and came up with a number that has no relation to reality.

But expect to hear that number a lot when members of Congress hit their town-hall meetings over the next two weeks, as they try to scare seniors about supposedly having to pay $6,400 more out of pocket a decade hence. This was politically motivated math that would be exposed if the White House had the decency to provide a plan rather than a speech. They shouldn’t get away with it, especially since the president’s own proposal is much more dangerous for current seniors. Not only does he do nothing to save the program from bankruptcy, but seniors in this decade will face nearly $10,000 in benefit cuts under IPAB’s rule.

The president’s speech missed the mark in both form and content. How insulting to invite Congressman Ryan to sit in the front row, only to literally look down on him and belittle his serious plan to save entitlement programs for future generations!

The speech could have been an opportunity to start “an adult conversation” over saving our country from fiscal calamity. Instead, the president used his time at the podium to give a shallow political speech that reiterated the same government-centric policies.

The president is kicking hard choices down to road to his successors or to unelected bureaucrats. He proposed yet another commission; he walled off entitlement programs from genuine reform, even though it is clear that Medicare, Medicaid, and Social Security are the real drivers of the deficit; and he would give new powers to IPAB appointees, proposing they be directed to limit Medicare cost growth per beneficiary to GDP growth per capita plus 0.5 percent beginning in 2018 vs. 1 percent under current Obamacare law.

He also targets prescription drugs for savings when it represents only a small fraction of overall Medicare spending. (We have to wonder what happened to the deal that prescription-drug companies wouldn’t be demonized if they came to the table and supported Obamacare.) Further, the president refuses to give governors real power to manage their Medicaid programs even as his new health-care law threatens to crush states with more than $115 billion in new spending from mandated-coverage expansions. The only way to “make Medicaid more flexible, efficient, and accountable” is to give states the resources and incentives to better manage spending through block grants that allow them to cut through mountains of federal red tape, as the Ryan plan would do.

Robert Pear of the New York Times had an important article about Medicaid in which he describes a conversation he had with a Louisiana Medicaid recipient, Nicole Dardeau. “My Medicaid card is useless for me right now,” Ms. Dardeau said over lunch. “It’s a useless piece of plastic. I can’t find an orthopedic surgeon or a pain management doctor who will accept Medicaid.”

And what does Obamacare do? It sends up to 25 million more people to this Medicaid ghetto as states are forced to dramatically expand their programs, making it even more difficult for the poorest and sickest recipients to get care in ever more crowded hospital emergency rooms.

Seniors should be listening, because under Obamacare, that is their fate, too.