Medicare will see boost, not cuts, in 2014

Policy reversal comes after fierce criticism

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Bowing to intense election-year pressure from both Democrats and Republicans, the Obama administration reversed course Monday and said that rather than cutting Medicare Advantage payments, it will actually boost them next year.

It’s another change to the implementation of Obamacare, and one that is likely to pay political dividends for President Obama, who was facing fierce criticism from those in his own party who said their constituents were facing the brunt of cuts.


SEE ALSO: States see big disparities in Obamacare Medicaid sign-ups


Still unclear is what the change will mean for the overall costs of the Affordable Care Act, which called for about $200 billion in cuts to Medicare Advantage over the first decade, with the money going to boost the rest of Mr. Obama’s health programs.

Jonathan Blum, principal deputy director at the Centers for Medicare and Medicaid Services, said the agency’s decision to raise payments by 0.4 percent, rather than cut by 2 percent as planned, is “significantly better for the plans, obviously, than what CMS proposed in February.”

Mr. Blum said the industry urged the administration to keep rates at a level on par with where they are today. The increase, he said, is due in part to healthier enrollees reducing overall costs, bolstering the solvency of the program in the long run.

America’s Health Insurance Plans, a top trade group, fiercely objected to Medicare Advantage in an ad campaign that featured angry seniors, one of which reminds power brokers in Washington that “we vote.”

The administration’s retreat did little to quell the furor among Republicans, who said it won’t undo several years of cuts that have already taken place, nor the tens of billions of dollars that could still be cut in the future.

“Because of Obama Care, many seniors are paying higher premiums and out-of-pocket costs, as well as losing their doctor and other critical health benefits — all broken promises from President Obama,” House Speaker John A. Boehner said in a statement.

About 30 percent of seniors in Medicare use the Medicare Advantage option, which acts like a regular insurer, rather than the traditional fee-for-service model on which regular Medicare is based.

The Obama administration argues Medicare Advantage pays too much for the benefits received, with the money going to enrich companies rather than earning better care for seniors. It made cutting the program a cornerstone of its health law.

But as the cuts have begun to hit, seniors have rebelled, and have enlisted both parties in Congress. On Monday, they took credit for pushing the administration’s change of heart this year.

“I am pleased that our bipartisan effort to protect Medicare Advantage was successful,” said Rep. Kyrsten Sinema, an Arizona Democrat facing a tough re-election bid, who had vociferously opposed the cuts. “CMS listened to our reasonable request and took appropriate action to keep Medicare strong. We stood up to a bad rule and we won.”

The latest tweak comes a week after the Obama administration announced that more than 7 million Americans enrolled in health plans through Obamacare’s exchanges. That achievement marked a spectacular recovery after initial glitches knocked the administration off course in October.

In addition to that 7 million, millions more signed up for Medicaid, discovering they were eligible for the federal-state health program for the poor.
A new private analysis Monday found that just 10 states accounted for more than 80 percent of the 3 million new Medicaid enrollees, though.

Avalere Health, a Washington consulting agency, analyzed new data from the Obama administration and released a color-coded map that shows a wide disparity in enrollment totals from state to state. California, Florida, Oregon and Washington brought in the most new participants in the government health program for low-income Americans.

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