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Op-Ed" Speaker Pelosi's Health Care Plan Does Cut Medicare

Press Release

Location: Washington, DC

If House Speaker Nancy Pelosi's health care plan passes, 6 million seniors will lose access to Medicare benefits they now have, their health care will deteriorate, and many other Medicare recipients will also see a decline in care.

This is because 11 million seniors, or 22 percent of all Medicare beneficiaries, are enrolled in a Medicare health plan called Medicare Advantage. If the law were to remain unchanged, the nonpartisan Congressional Budget Office predicts 14 million seniors would enroll in a Medicare Advantage plan by 2019.

However, Ms. Pelosi's health care plan would slash access to Medicare Advantage to the point that in 10 years only 8 million seniors would be enrolled. According to the Centers for Medicare and Medicaid Services, 24,286 seniors in my congressional district could lose their Medicare Advantage plans.

The Senate bill isn't any better. Douglas Elmendorf, director of the Congressional Budget Office, told Congress this week that the bill by Sen. Max Baucus of Montana would cut payments to the Medicare Advantage plans by more than $100 billion over 10 years.

Several recent studies show why a meaningful reform should expand Medicare Advantage programs, not cut them.

For example, a recent study adjusted for health risk shows that seniors enrolled in a Medicare Advantage plan spend fewer days in the hospital, are less likely to be re-hospitalized and have fewer preventable readmissions than seniors enrolled in traditional Medicare. In fact:

• In California, seniors in Medicare Advantage plans had hospital stays 30 percent shorter than those in traditional Medicare. Similarly, in Nevada, seniors enrolled in a Medicare Advantage plan had 23 percent shorter hospital stays.

• In California, seniors in Medicare Advantage plans were 15 percent less likely to be re-hospitalized for the same condition than their counterparts in traditional Medicare. In Nevada, readmission rates for Medicare Advantage enrollees were 33 percent lower.

• In both California and Nevada, avoidable readmissions were 6 percent lower for seniors enrolled in Medicare Advantage plans.

Moreover, an analysis of hospitalization rates in 13 states by the U.S. Department of Health and Human Services found average hospitalizations for seniors in Medicare Advantage cost less than hospitalizations for seniors enrolled in traditional Medicare. If traditional Medicare had been able to harness similar efficiencies, federal spending for inpatient hospital stays--in just those 13 states--would have declined in 2006 alone by more than $970 million.

Another study, this one by the National Bureau of Economic Research, found that in counties with a high level of Medicare Advantage enrollment, doctor and hospital efficiency increased for all Medicare patients.

Currently, all seniors have access to at least one Medicare Advantage plan. However, the independent Medicare Payment Advisory Commission predicts Ms. Pelosi's bill will result in one in five seniors no longer having access to any Medicare Advantage plan. Their choice will be taken away.

Furthermore, MedPAC predicts that the value of additional benefits seniors receive through Medicare Advantage will be cut by $252 per year. These additional benefits include protections against high out-of-pocket costs, vision and dental coverage, and free preventive care and cancer screenings.

Because the government-run Medicare benefit is less generous than most private health plans, nine in 10 seniors who are not in nursing home settings utilize some form of Medicare supplemental insurance. While many of these seniors currently rely on Medicare Advantage plans for the extra benefits, those who lose access to Medicare Advantage would be forced to purchase supplemental Medigap policies.

Ms. Pelosi's bill would place strict price controls on Medicare Advantage plans, requiring them to pay out 85 percent of premium revenues in medical claims. In contrast, Medigap policies now and under Ms. Pelosi's bill face a far less strict 65 percent requirement. In other words, seniors could pay as much as 20 percent more--or receive 20 percent less in benefits--under Medigap plans than Medicare Advantage plans.

It's clear Ms. Pelosi's bill will hurt seniors by limiting access, increasing costs and by lowering health care efficiencies. Any plan that curtails Medicare Advantage instead of expanding it is the wrong prescription for reform.

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