One of the primary questions about Congress' moves towards healthcare reform is how they are planning to pay for it. A variety of budget cuts and tax increases have been proposed by the House of Representatives and the Senate in order to provide affordable health care. Many are especially worried about the impact of the Senate's proposed decrease in Medicare health insurance plan spending. However, a prominent senior citizen association recently announced that they support the Democratic bill, which includes approximately $460 billion in Medicare cuts. Why would they back legislation that may harm people over the age of 65, half of whom are card-carrying members?
Detractors would point to their history of supporting many laws proposed by Democrats, and say that the group is too cozy with that party. The group takes a different view; CEO A. Barry Rand told its members that the proposal would not reduce any guaranteed benefits associated with the government-sponsored health insurance plan. Moreover, he pointed out that Medicare has recently been plagued by inefficiency, waste, and fraud--eliminating such expenses should cover most of the shortfall. Some believed that such wasteful spending is inevitable when the federal government is involved, making their support of a public option (effectively taking the form of "Medicare for all" health insurance plan) ludicrous.
Republicans such as Senator John McCain warn that the cuts will target some of the add-on benefits many seniors have come to expect from Medicare Advantage. These benefits often include gym memberships to maintain their fitness, in addition to higher quality vision and dental care. A Medicare Advantage health insurance plan is sold by private insurers as a supplement to standard Medicare. Proponents of the healthcare reform bill admit that Medicare Advantage programs will face the bulk of the cuts in federal funding, but accuse the health insurance plan providers of using the partially subsidized premiums primarily to finance corporate profit margins for their shareholders and exorbitant salaries of their executives.
There is definitely some opportunity for cost saving. Studies show that a senior citizen covered by a private health insurance plan (e.g. Medicare Advantage) costs the government 14% more than one on regular Medicare. It remains to be seen if the benefits to seniors outweigh the continuous additions to the budget deficit. McCain admonished the the group for using Medicare funding as a "piggy bank" to pay for other health care programs, thereby driving it closer to bankruptcy. The organization has also been criticized for not recognizing the wishes of their own membership: there is no doubt some overlap between their membership roster and attendance at the town hall rallies earlier this year.
The Senate is expected to vote on the Medicare cuts today, prior to debate on the complete healthcare reform bill. Democratic Sen. Michael Bennet has proposed an alternative amendment that would result in all guaranteed Medicare benefits being spared--a move which he recognizes could cost him his seat. His proposal could see more support from Democrats wary of alienating the most consistent demographic of voters. Meanwhile, McCain has proposed his own amendment to change the language of the Medicare-related provisions and send the bill back to senatorial committees. They are accustomed to their health insurance plan and understandably resistant to change.
Are they likely to succeed in their goal? The likelihood is high. It is 40 million members strong, and has been a powerful lobbying group for decades. Even a fraction of them writing letters or making phone calls can have a significant effect on pending legislation. The impact such a move will have on co-branded health insurance plan offerings remains to be seen.
Yamileth Medina is an up-and-coming expert on the health insurance industry. She strives to provide balanced facts about health care reform and other issues in an easily understood manner. Yamileth lives in Miami, Florida.
