Politics & Policy

Obamacare’s Hidden Switcheroo

Representative Darrell Issa (R., Calif.)
The law plans to cut $200 billion from Medicare Advantage to fund Medicaid.

One of the least-discussed tricks of Obamacare is that it plans to cut $200 billion from Medicare Advantage (the popular program that provides 27 percent of seniors with privately managed Medicare plans) and use that money to subsidize expanding coverage to millions of uninsured Americans under Medicaid (the government’s program for the poor). In the run-up to the election, Obamacare bureaucrats have been doing all they can to hide this switcheroo from the American people.

On Friday, Representative Darrell Issa (R., Calif.), who chairs the House Oversight and Government Reform Committee, blew the whistle on the bureaucrats’ stalling tactic: He intends to issue a subpoena for key documents from the Department of Health and Human Services that will shed light on “a brazen attempt to hide the true costs of Obamacare.”

Issa says that bureaucrats inside HHS have strung along his committee since May, and he has had enough. “Your staff has run out of excuses and the long delay in providing these documents is inexcusable,” he wrote Secretary Kathleen Sebelius in a letter this week. Late on Friday, HHS did belatedly deliver 1,300 pages related to his request, but they were in a completely unorganized form, and more than 600 of them were simply tables of numerical data.

In what it calls a demonstration project, the administration plans to direct some $8.3 billion into Medicare Advantage — enough to offset 71 percent of the cuts planned in the program from this year until 2014. Channeling $8.3 billion into Medicare Advantage is an attempt, Issa says, to hide the pain of the soon-to-come $200-billion cut. The “demonstration project” rationale HHS is using to delay the $200 billion cut is, Issa says, a “political fiction that is being used to buy votes in this election.”

HHS is authorized under current law to conduct “demonstration projects.” The “Medicare Advantage Quality Demonstration Project,” however, has a price tag of $8.3 billion — a sum greater than all 85 previous HHS demonstration projects combined. Issa believes that the documents HHS is withholding from him would reveal the blatantly political nature of the effort to disguise cuts in Medicare Advantage until after November 6. He notes that the so-called demonstration project has already failed in the eyes of the Government Accountability Office, the federal government’s auditor: Last March, it recommended that the project be terminated.

Compared with traditional Medicare, Medicare Advantage plans provide better preventive care and care that is better coordinated, along with more generous prescription-drug coverage. The program is most popular with poorer Hispanics and African-Americans. A 2009 study by the federal Centers for Medicare and Medicaid Services found that 54 percent of Hispanics on Medicare are enrolled in Medicare Advantage, and 40 percent of African-Americans are as well.

But Democrats dislike the plan’s private-sector nature, and they have some legitimate arguments against its unevenly generous reimbursement rates. But rather than surgically reform the program, they are seeking to loot it in order to pay for Obamacare’s expansion of Medicaid. “They are trying to find a way to slowly suffocate the program, end its privately managed parts, and turn more power over to bureaucrats,” says Grace-Marie Arnett of the Galen Institute, a private-sector health-care think tank.

President Obama himself told the Washington Post in 2009 that Medicare Advantage should be cut because people “aren’t getting good value” from it.

Many Democrats disagreed strongly with this sentiment, although very few spoke up about it during the debate over Obamacare. One who did was Oregon governor Ted Kulongoski, who wrote the Obama administration in 2009 to criticize its efforts to “scale back Medicare Advantage.” In Oregon, Medicare Advantage plans serve 39 percent of its Medicare enrollees, and they “play an important role in providing affordable health coverage,” Kulongoski wrote. He noted that the program has worked well in his state and has reduced hospital-admission rates for patients with many chronic diseases.

If Obamacare remains the law of the land, its planned cuts to Medicare Advantage will force many seniors to go back to traditional Medicare at greater expense. The Florida Association of Health Plans found that because Medicare Advantage plans have more benefits and lower co-payments than traditional Medicare does, patients in that state could see their overall Medicare costs rise significantly — from $2,214 to $3,714 a year, depending on the insurance market they are in.

All this casts doubt on President Obama’s infamous statement that under Obamacare, anyone who likes his current health-insurance coverage will be able to keep it. Tell that to the 13 million seniors who are about to see their Medicare Advantage benefits dismantled or transformed beyond recognition. No one expects HHS to comply with Issa’s subpoena in time for voters to know the whole truth. But the outlines of what we do know are bad enough, and critics of Obamacare should do all they can to point out the law’s hidden costs and uncounted victims, as states begin to implement Obamacare, piece by awful piece.

— John Fund is national-affairs correspondent for NRO.

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