Republicans Try An Elementary School Defense On Medicare

There are echoes of 'I'm rubber, you're glue' as the GOP desperately fends off attacks on its debt ceiling gambit.

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Republicans are livid at the suggestion that their demand for unspecified spending cuts, which they’ve laid out as a condition for raising the nation’s debt ceiling, means that they are actually trying to gouge Medicare and Social Security.

You could see that pretty clearly last week, during the State of the Union address, when President Joe Biden mentioned that several Republicans had called for cutting the two entitlement programs. Multiple Republicans shouted at Biden, calling him a liar ― an accusation they have repeated in countless opinion articles, speeches and interviews both before and since.

I have been paying particular attention to the debate over Medicare because I cover health care. I haven’t seen any polling on the question of Medicare cuts specifically, so I can’t say definitely whether these Republican protestations are playing well with the public.

But my hunch is that they are not, given the intensity of the GOP reaction ― and a new argument they are trying out now. They are saying that it’s the Democrats who are trying to cut Medicare, not the Republicans.

It started out as a talking point among GOP officials, and now it’s become the focus of advertisements that the National Republican Senate Committee has launched against Democrats. (You can see one here if you’d like.)

If you think the GOP argument sounds like a slightly more sophisticated version of “I’m rubber, you’re glue; whatever you say bounces off me and sticks to you,” then you’re not the only one.

And if you’re skeptical of their claim, you have good reason to be.

Here’s why:

It’s An Argument About Medicare Advantage

The argument Republicans are making is actually about Medicare Advantage plans, which are private insurance policies seniors can choose instead of the traditional government program.

If you pick one of these plans, then the federal government will pay the insurance company that runs the plan. The insurer will then pay your medical bills.

And you will have lots of company!

Versions of these private Medicare plans have been around for decades, but they really took off in the mid-2000s. At last count, more than 28 million Americans were in Medicare Advantage plans, accounting for roughly half of the Medicare population. Projections suggest the number is going to keep rising.

It’s a big transformation and significant victory for conservatives, who have long championed private alternatives to government health insurance ― or any government programs, for that matter.

The federal government is constantly recalibrating how it pays the insurers based on analyses of their performance and finances. Over the years, that sort of analysis has repeatedly turned up evidence that the government is paying too much, given what the plans actually provide to their beneficiaries.

One reason is the well-documented problem of “upcoding,” which is basically insurers using the payment system to get extra money that’s supposed to compensate them when they take on beneficiaries in worse health. And though there’s (some) evidence that Medicare Advantage plans outperform traditional Medicare when it comes to supporting preventative care, there’s also evidence ― well-documented in this New York Times article ― that they deny essential care more frequently.

Changes in Medicare Advantage payments come from the Department of Health and Human Services, which today is under the Biden administration’s management. In January, it announced a series of adjustments that it expects will work out, on average, to the plans getting a 1% increase per patient in 2024.

And now we get to the first big dispute.

It’s An Argument About Payments To The Plans

An organization called Better Medicare Alliance has commissioned its own analysis, from the independent actuarial firm Avalere, which has concluded that the proposed payment changes would actually mean a 2.27% reduction.

“We’re confident that this proposal does result in unprecedented cuts to Medicare Advantage for seniors and those with disabilities,” Mary Beth Donahue, president of the Alliance, told me on Friday.

Don’t worry, readers, I am not about to litigate that dispute here. It’s a highly technical argument involving benchmarks, risk scores and (have your eyes glazed over yet?) regional adjustments.

Here’s what I can tell you.

Avalere is a well-respected firm with many well-respected analysts. It also did this work on contract for the alliance, whose members include CVS/Aetna, Humana and UnitedHealth, three of the biggest sellers of Medicare Advantage plans. Humana and UnitedHealth alone account for nearly half the market.

(Donahue confirmed that more than half of the alliance’s funding comes from insurance plans.)

Whether the administration’s proposed changes would work out to a 1% increase, a 2.27% decrease or something in between, there’s a separate question of whether those changes lead to changes in benefits. The alliance says they will ― that if the insurers get less money, they’re bound to cut back on the benefits the plans offer.

In practice, that would most likely mean cutting back on some of the extra benefits in Medicare Advantage plans, like routine vision or dental coverage, that traditional Medicare doesn’t cover. These benefits are what make Medicare Advantage appealing in the first place.

“These policy changes add up to an average of $540 in new costs for beneficiaries next year,” Donahue said, citing a figure from the Avalere analysis. “That is very, very dramatic.”

But many experts are skeptical that plans would cut back substantially on benefits ― or cut back at all.

“There’s not a lot of evidence to suggest that lower payments to MA will necessarily result in lower benefits to beneficiaries or to higher premiums,” Richard Kronick, an economist at the University of California, San Diego, and one of the nation’s leading experts on Medicare Advantage, told me

His take is consistent with the findings of a new brief on the subject from KFF, the California-based nonprofit research and analysis organization focusing on health care. KFF’s brief notes that past experience as well as recent analysis from the nonpartisan Medicare Payment Advisory Commission (MedPac) suggests that plans typically respond to reductions by reducing administrative overhead or profits.

And to be clear, they have plenty of profits to reduce. Medicare Advantage is now the most profitable line of business for health insurers.

“My read of the evidence is that reductions in payments to Medicare Advantage plans are largely borne by the plans themselves, either through lower profits or cost reductions,” Matthew Fiedler, a senior fellow at the University of Southern California’s Brookings Schaeffer Initiative for Health Policy, told Politifact this week.

Fiedler served in the Obama administration, as did Kronick. And not every expert was so skeptical. Joseph Antos, an economist at the conservative-leaning American Enterprise Institute, told Politifact he thought the reductions might lead to benefit reductions. But even he didn’t say they’d be drastic.

It’s An Argument About The Meaning Of ‘Cut’

Debates like these are commonplace, and not just in health care policy. Industries are constantly fighting with the federal government over how much money they should receive for providing various services.

This year, however, the routine pleading by health insurers happens to dovetail with the desperation of GOP leaders to downplay (or distract attention from) examples of Republicans like Sen. Rick Scott (R-Fla.) or the House Republican Study Committee calling explicitly for cuts to Medicare.

The GOP argument, which many conservative intellectuals embrace, is that any reduction in what the federal government sends to Medicare represents a “cut.” And so potentially reducing payments to Medicare Advantage or, say, using government negotiating power to reduce what Medicare pays drug companies, is fundamentally the same as raising the eligibility age (as the Republican Study Committee floated) or requiring that the program obtain new congressional authorization every five years (as Scott suggested).

But there’s a difference in the two approaches. What the Democrats are proposing represents an effort to manage the program differently, not change its fundamental commitment to seniors and people with disabilities. “I don’t think these are equivalent changes at all,” Kronick said.

University of Southern California economist Paul Ginsburg had a similar take, telling Politifact that the Biden administration’s proposed payment changes are about “running the program better and more efficiently to protect the integrity of the federal funds being used for it.”

Whether that distinction matters to the public, obviously, is a separate question ― and one that depends on how the debate plays out in the coming weeks. White House press secretary Karine Jean-Pierre got a question about the topic at Friday’s briefing, not long after Scott clarified that his call to put federal programs up for regular re-authorization every five years did not include Medicare.

You could take that statement as a sign that Scott really does believe Medicare is sacrosanct and that he thought so all along. Or you can take it as a sign that he senses the political vulnerability of his position ― and that the rest of his party does, too.

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