Today will bring the latest report from the Medicare trustees on the program’s solvency, or lack thereof. Expect a slight improvement to appear thanks to the 2 percent cut to providers mandated under the sequestration agreement – but that’s fool’s gold, and everyone knows it.
An interesting side note to the trustees’ report is this story regarding a GAO report on a specific aspect of Medicare’s funding failures – namely, that the Obama administration is taking many steps to hide the costs of its Medicare cuts until after Election Day, diverting $8.4 billion as a stopgap measure. Phil Klein has more:
Though the GAO did not specifically say that election year politics were behind the decision, the report released today makes it difficult to reach another conclusion. Had Obamacare gone into effect as written, millions of enrollees would have seen their benefits cut in 2012. But as a result of this project, 71 percent of scheduled payment cuts will be offset, according to the GAO.
The Obama administration has justified the project as an experiment to see how certain bonus payments work. But the GAO concluded that, “(t)he design of the demonstration precludes a credible evaluation of its effectiveness in achieving CMS’s stated research goal.” Also, the GAO found that the size of the project “dwarfs all other Medicare demonstrations – both mandatory and discretionary – conducted since 1995 in its estimated budgetary impact and is larger in size and scope than many of them.” The report added “that the estimated budgetary impact of the demonstration, adjusted for inflation, is at least seven times larger than that of any other Medicare demonstration conducted since 1995 and is greater than the combined budgetary impact of all of those demonstrations.”
The GAO report is here. Sen. Jim DeMint’s office comments:
GAO found that this massive demonstration project “is at least seven times larger than that of any other Medicare demonstration conducted since 1995 and is greater than the combined budgetary impact of all of those demonstrations.” According to GAO, the demonstration “precludes a credible evaluation of its effectiveness,” and is instead focused on shelling out money to temporarily undo much of ObamaCare’s cuts – a whopping 71% of ObamaCare’s Medicare Advantage cuts will be undone in 2012, compared to just 32% in 2013 and 16% in 2014. (Can anyone think of a reason why the Obama Administration might want to undo the Medicare Advantage cuts this year? …) For all these reasons, as a New York Post op-ed this morning noted, the demonstration program looks suspiciously like a political attempt by the President to avoid angering seniors by cutting Medicare Advantage while running for re-election.
The GAO report proves how the Administration’s study is fundamentally flawed. The Administration report assumes all the Medicare spending reductions will go into effect, but the GAO report illustrates how the Obama White House has already reversed one of the major spending reductions – the Medicare Advantage cuts – in order to fend off political dissent during the President’s re-election campaign.
Notably, the cuts involved here were an aspect of the law that then CMS head Don Berwick was warned about repeatedly at the time, since just about anyone with a rational bit of brain matter could tell you that a program designed to give bonus payments to nearly everyone and diminish cost-sharing would have a negative fiscal impact. But this is just one more example of the kind of basic economic lessons the White House ignored in their rush to pass this mess of a law.
