Hey, Republicans - it's not nice to scare Grandma for no good reason

I'm trying to remember when it was that Republicans became such big champions of Medicare.

Certainly not in 1965, when the GOP joined the American Medical Association in fighting enactment of the program. Was it in 2003, when they "rammed down our throat"--to coin a phrase--the privatized, complex Medicare D prescription drug mess? Or was it in January this year, when Rep. Paul Ryan (R-Wisconsin)--the ranking Republican on the House Budget Committee--proposed replacing Medicare with a voucher program for seniors?

One thing's certain--Republicans do seem very worried about Medicare of late. They've fought reform with warnings about death panels, slashed Medicare budgets and totalitarian takeovers of hospitals and doctors' offices.

But you know what? It's not nice to scare Grandma for no good reason. So, now that the smokescreens are starting to clear, let's provide some reassurance by revisiting the important benefits of the new law for Americans on Medicare.

First, there are no cuts to traditional Medicare in the new law--none. What the law does is reduce reimbursements to Medicare Advantage--the privatized Medicare insurance plans that offer all-in-one medical and drug coverage. These are managed care plans from insurance companies-PPOs, HMOs and the like.

And they are reimbursed by the federal government at 114 percent of regular Medicare rates--a payment scheme that was put in place to stimulate the Advantage market but amounts to no more than a big subsidy to insurance companies. The new law freezes Advantage payments at current levels through 2011, and then reduces them by $116 billion over a period of years, ultimately equalizing reimbursements with traditional Medicare.

Will that mean a squeeze on Advantage plans? Not necessarily. That's because the new law also offers bonuses to Advantage plans that meet certain benchmarks for high quality care. "That could engender a race to the top," argues Joe Baker, president of the Medicare Rights Center.

Also, keep in mind that Advantage plans operate in a competitive marketplace. If a plan were to slash benefits, enrollees could simply move to more attractive plans during the annual enrollment period. It's more likely that the reduced reimbursements will put pressure on insurance company profit margins.

And these plans could stand some tightening up. A recent report to Congress on Advantage prepared by the majority staff of the U.S. House Committee on Energy and Commerce found that:

• Medicare paid $12 billion more in 2009 for Advantage beneficiaries than it would have if the beneficiaries had participated in traditional Medicare.
• Advantage plans are spending less of every premium dollar on actual medical care delivery than basic Medicare.
• Twenty-three insurance companies in the program spent $121 million on 355 corporate retreats for executives, insurance brokers and board members between 2008 and 2009.

Next, let's talk about the new Medicare benefits contained in the law. First, the Medicare D prescription drug doughnut hole will be closed. That's the coverage gap that starts when a beneficiary's annual drug spending hits $2,830, and resumes at the catastrophic level ($4,550 out of pocket).

This year, patients who enter the doughnut hole will get a $250 rebate. In 2011, pharmaceutical companies will provide a discount of 50 percent on brand-name drugs to low- and middle-income beneficiaries who find themselves in the gap. Then, the doughnut hole itself will shrink a bit every year, ultimately disappearing entirely in 2020.

The law also contains some important improvements to traditional Medicare aimed at boosting preventive care. Starting next year, Medicare patients also will be able to get an annual wellness visit--with no co-payment or deductible--that includes a comprehensive health risk assessment and a long-term personalized prevention plan.

And deductibles and co-payments will be eliminated for most preventive care services, starting this year. And doctors will receive incentives for joining accountable care organizations, which will coordinate patient care and foster greater attention to prevention.

These new accountable care groups could really use a catchy name. Wellness panels, anyone?