MARY AGNES CAREY: Good day. This is Health on the Hill. I’m Mary Agnes Carey. More than 13 million Medicare beneficiaries – and that’s about a quarter of all beneficiaries – are enrolled in Medicare Advantage, an alternative to traditional Medicare that’s offered by insurance companies. The health law’s payment reductions to Medicare Advantage plans were the subject of a House hearing today. Emily Ethridge, a health care reporter for CQ Roll Call, attended that hearing and joins us now to discuss what happened. Thanks for being with us, Emily.
EMILY ETHRIDGE: Thank you for having me.
MARY AGNES CAREY: First let’s talk about what the health law cuts would mean to the Medicare Advantage program.
EMILY ETHRIDGE: Well, the Congressional Budget Office has found that the Medicare Advantage plans – the private insurance plans that offer this service to beneficiaries – will be cut by about $156 billion over 10 years. That’s just the direct cuts to the program. And there is a lot of concern with Republicans and other health watchers that it’s going to lead to reduced enrollment and maybe higher costs for beneficiaries.
MARY AGNES CAREY: So they are talking about that they think the enrollment would be reduced and costs would be higher for beneficiaries. What would that happen as a result of a payment reduction?
EMILY ETHRIDGE: Right now, Medicare reimburses these plans at a certain rate. Generally, it’s higher than the traditional fee-for-service rate that they get from the government. So, they’re saying if you lower these rates by $156 billion over 10 years, that’s really going to affect the quality of the plans they’re going to offer, the number of people they’ll be able to provide care for, just less money for these plans overall.
MARY AGNES CAREY: Earlier in the week, Democrats and the Obama administration pointed to new data that they said makes their case that the reductions in the health law to Medicare Advantage plans will not harm the program. Can you take us through that?
EMILY ETHRIDGE: That’s right. The administration released a report that found that enrollment in the Medicare Advantage plans is actually expected to increase by 11 percent next year. It’s been increasing for the past two years, I believe. It’s basically skyrocketed since 2003 when these plans were really put into place. And at the same time, premiums are staying about the same. They’re inching up a little bit but overall its pretty steady. And, like you said in the beginning, about a quarter of all beneficiaries in Medicare are in one of these plans. So they think the future is bright.
MARY AGNES CAREY: But today, the Ways and Means health subcommittee had this hearing and its chairman Wally Herger, Republican of California, was quite critical of the bonus program that’s in the health law. The administration now awarding bonuses to some of these Medicare Advantage plans, and he and other Republicans have made the case that his really obscures the effect of the cuts.
EMILY ETHRIDGE: Right. The Republicans were saying today at the hearing that the reason they have these rosy projections, and these expected increases in enrollment, is because this bonus program is overshadowing the real effects of the cuts and that once this temporary bonus program, which lasts three years so it will end in 2014, once that ends then we’re really going to see the effects of these cuts come into play.
MARY AGNES CAREY: Then again, I have to do a point-counterpoint here, but I believe the Democrats would step up and say that from their perspective Medicare Advantage insurers are invested in the program and they say they want to stay in the program. So they don’t necessarily share the same view that once the bonus payments are discontinued, insurers will leave.
EMILY ETHRIDGE: Absolutely. And these bonus payments, the Government Accountability Office found spent about $8 billion over 10 years on this demonstration program. In the the status of the $150 billion cuts, that’s only a small part of it. So it’s not as though there’s a bonus program happening right now that is exactly equal to what the cuts would have been and we’re just delaying the cuts. It’s true that there are plenty of plans participating in Medicare Advantage. The enrollment does seem to be increasing, so Democrats are committed to keeping these plans going.
MARY AGNES CAREY: Emily, you’re a close watcher of Capitol Hill. As you know, Congress is on the verge of recessing for the election. A Friday morning hearing is pretty unusual on Capitol Hill. Why did House Republicans on this subcommittee – why would they have this hearing now?
EMILY ETHRIDGE: This is another chance for the Republicans on this committee to attack the 2010 health care law again. This is the thing they’ve been doing all year, consistently attacking it. Holding hearings to look into it, finding different parts of it to criticize. This is just one more chance for them to go after it before they go home, right before the election season. They think the health care law is something they can campaign on. Even though it’s maybe not the top priority of a lot of voters, it’s definitely getting traction. Both sides think they can get traction on health care as we head up to the elections in November.
MARY AGNES CAREY: Well, we’ll keep our eye on that. Thanks so much, Emily Ethridge of CQ Roll Call.
EMILY ETHRIDGE: You’re welcome.