Medicare Cuts Will Hit Medicare Advantage Next Year

About 6 weeks ago I wrote a post revealing that Medicare Advantage would face cuts not in the distant future but next year.The cuts were to begin in October of this year but HHS by spending $8.4 billion on a so called "demonstration project" has managed to postpone those cuts until early 2013. At the time that post was written Medicare was not in the public conscience. With the selection of Paul Ryan to the Republican presidential ticket, Medicare and the cuts extracted to fund Obamacare are now front and center in public debate so I feel I should revisit that subject, a subject that will effect about 25% of current Medicare recipients. It is nice to know that Democrats perceive these cuts as an achievement.


ObamaCare drastically reduces payments to MA plans; the cuts will total $150 billion over 10 years. This will force insurers to scale back the extra benefits they are able to provide seniors, or to withdraw their plans entirely from some markets. In some rural areas, these cuts may force all existing MA plans to pull out, leaving the beneficiaries with no options outside of the traditional program. In fact in the following video Obama says just that, adding that change is hard. It is especially tough on seniors enrolled in MA as the Heritage Foundation computes it will cost MA participants $44,000 in higher premiums and lost benefits over their retirement years but as Obama says change is hard.



Medicare Advantage enrollment rates vary by state, ranging from 44% in Minnesota to less than 1% in Alaska, and vary within states, by county. Enrollment rates are higher in urban than in rural counties. Yes as Obama says, change is hard, but when one looks at the enrollment rates by state in the graphic below, one might predict that change is going to be especially hard on Senatorial and Congressional candidates in Colorado, Florida, Ohio, Pennsylvania, Michigan, Nevada, and Wisconsin, which also happen to be battleground states at the presidential level. In each of those states MA enrollment is above 30 percent which means that 3 in 10 voters has a grave financial interest in the election. Will voters be apt to forgive their congressman or senator who voted for this subterfuge? We shall see.

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