The Mystery About Obama’s Medicare Cuts

Four days after the proposed 2015 payments were unveiled, no one really knows how much of a cut insurers are facing.

An auxiliary nurse assists a patient in a geriatric unit at the hospital in Angers, western France, on October 23, 2013. The Angers hospital employs 6,000 people including 980 doctors.
National Journal
Clara Ritger
Add to Briefcase
Clara Ritger
Feb. 25, 2014, 10:32 a.m.

The Obama ad­min­is­tra­tion un­veiled its latest round of pro­posed cuts to the Medi­care Ad­vant­age pro­gram Fri­day, but days later even the in­sur­ance in­dustry isn’t sure how big a blow the ad­min­is­tra­tion dealt.

The pay­ment reg­u­la­tion it­self, and an ac­com­pa­ny­ing press re­lease, didn’t make it easy to fig­ure out ex­actly what the Medi­care agency was pro­pos­ing — aside from the fact that it was def­in­itely a cut, of some mag­nitude. An email sent Monday by the trade group Amer­ica’s Health In­sur­ance Plans, says Wall Street ana­lysts are es­tim­at­ing cuts of any­where between 4 per­cent and 9 per­cent to the pro­gram.

Without its own es­tim­ates of the im­pact, AHIP’s spokes­man Robert Zirkel­bach re­peated the line in­surers have been push­ing for weeks: Any cut is too big.

“The goal here is to keep pay­ments flat, giv­en that the pro­gram just saw a 6 per­cent cut last year,” Zirkel­bach said.

Roughly 30 per­cent of Medi­care be­ne­fi­ciar­ies are en­rolled in private in­sur­ance through the Medi­care Ad­vant­age pro­gram, and ac­cord­ing to con­sult­ing firm Avalere Health, the pro­gram’s num­bers con­tin­ue to swell des­pite the meas­ured im­ple­ment­a­tion of new cuts. Health plans face some $150 bil­lion in Medi­care Ad­vant­age re­duc­tions over the next 10 years due to the Af­ford­able Care Act, as law­makers seek to rein in over­spend­ing in the pro­gram.

At the top of the spec­trum, Bank of Amer­ica/Mer­rill Lynch ana­lysts pegged the total in­dustry im­pact to be about -9.3 per­cent, while Wells Fargo’s gurus es­tim­ate a much lower -3.79 per­cent im­pact.

The Cen­ters for Medi­care and Medi­caid Ser­vices, however, con­tin­ues to push -1.9 per­cent. That num­ber, an agency spokes­man wrote in an email, is the es­tim­ated pro­posed 2015 pay­ment re­duc­tion rate, based on the com­bined growth rates in tra­di­tion­al Medi­care and Medi­care Ad­vant­age.

The growth rate by it­self does not ac­count for cuts im­posed by the Af­ford­able Care Act, the new health in­sur­ance tax, the end of a qual­ity bo­nus pro­gram which in­surers qual­i­fied for through this year, and oth­er changes such as no re­im­burse­ments for home health and re­duc­tions for cod­ing.

Wall Street ana­lysts did factor those ad­di­tion­al pro­pos­als in­to their es­tim­ates. CMS did not provide the com­bined im­pact of its pro­posed policies on the in­dustry, when asked.

Des­pite the pro­posed cuts, in­sur­ance com­pan­ies’ stocks rose Monday. Hu­mana, for in­stance, had ini­tially pre­dicted worse cuts than what it in­ter­preted from Fri­day’s an­nounce­ment.

CMS is ex­pec­ted to re­lease the fi­nal rates on April 7.

What We're Following See More »
A CANDIDATE TO BE ‘PROUD’ OF
Chicago Tribune Endorses Gary Johnson
22 minutes ago
THE LATEST

No matter that his recall of foreign leaders leaves something to be desired, Gary Johnson is the choice of the Chicago Tribune's editorial board. The editors argue that Donald Trump couldn't do the job of president, while hitting Hillary Clinton for "her intent to greatly increase federal spending and taxation, and serious questions about honesty and trust." Which leaves them with Johnson. "Every American who casts a vote for him is standing for principles," they write, "and can be proud of that vote. Yes, proud of a candidate in 2016."

FUNERAL FOR ISRAELI LEADER
Obama Compares Peres to ‘Giants of the 20th Century’
40 minutes ago
THE DETAILS

Speaking at the funeral of former Israeli Prime Minister Shimon Peres, President Obama "compared Peres to 'other giants of the 20th century' such as Nelson Mandela and Queen Elizabeth who 'find no need to posture or traffic in what's popular in the moment.'" Among the 6,000 mourners at the service was Palestinian President Mahmoud Abbas. Obama called Abbas's presence a sign of the "unfinished business of peace" in the region.

Source:
THE QUESTION
How Many New Voters Does the Clinton Campaign Aim to Register?
48 minutes ago
THE ANSWER

Three million—a number that lays "bare the significant gap between Donald Trump’s bare-bones operation and the field program that Clinton and her hundreds of aides have been building for some 17 months."

Source:
“STANDING FOR PRINCIPLES”
Chicago Tribune Endorses Johnson
1 hours ago
THE LATEST

In a somewhat shocking move, the Chicago Tribune has endorsed Libertarian candidate Gary Johnson for president, saying a vote for him is one that voters "can be proud of." The editorial barely touches on Donald Trump, who the paper has time and again called "unfit to be president," before offering a variety of reasons for why it can't endorse Hillary Clinton. Johnson has been in the news this week for being unable to name a single world leader who he admires, after earlier this month being unable to identify "Aleppo," a major Syrian city in the middle of the country's ongoing war.

Source:
NEVER TRUMP
USA Today Weighs in on Presidential Race for First Time Ever
14 hours ago
THE DETAILS

"By all means vote, just not for Donald Trump." That's the message from USA Today editors, who are making the first recommendation on a presidential race in the paper's 34-year history. It's not exactly an endorsement; they make clear that the editorial board "does not have a consensus for a Clinton endorsement." But they state flatly that Donald Trump is, by "unanimous consensus of the editorial board, unfit for the presidency."

Source:
×