An Itsy Bitsy $716 Billion Medicare Q&A

| Fri Aug. 24, 2012 2:08 PM EDT

Mitt Romney says that Obamacare cut $716 billion in Medicare spending. Is that true?

Yes it is. This is the most recent estimate from the CBO for the ten-year period from 2013-2022.

So seniors are getting screwed?

No, probably not.

Then who is?

Mostly hospitals and insurance companies.

How so?

About a third of the cuts come from reduced reimbursements to hospitals. About a third comes from reducing overpayments to insurance companies for Medicare Advantage plans, which are private competitors to standard Medicare. The remaining third comes from cuts in reimbursements to various other healthcare providers. More details here.

So there are no cuts to Medicare benefits?

Nope.

So Medicare beneficiaries have nothing to worry about?

Probably not. It's possible that the cuts to providers could lead to slight cuts in quality or even, via some unintended backdoor mechanism, to some doctors dropping out of Medicare. And the cuts to Medicare Advantage might prompt insurance companies to reduce some of the extra benefits they've provided. That's all speculative, but it's possible. There's no way to cut a bunch of money out of anything and guarantee that it will have no effect whatsoever.

However, the basic shape of the river here is pretty simple: Obamacare does indeed reduce Medicare spending by $716 billion (over ten years), but it doesn't reduce Medicare benefits by a single dime. It's unlikely that Medicare beneficiaries will see any noticeable effects at all.

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