ACA/Obamacare: When Politically Supplanting One Entitlement with Another Entitlement Doesn’t Balance the Books

‘Earlier this month, the Obama administration reversed course on spending cuts to the popular Medicare Advantage program. Instead of a nearly 1% cut in payments, private health insurers that offer Advantage plans to seniors would get a 1.25% boost.

The turnabout hardly made news, which isn't surprising since it was the third year in a row that the administration said it was planning to cut payments only to reverse course.

It is, however, emblematic of the fiscal trouble ObamaCare has planted in the federal budget.


When ObamaCare was being debated, opponents said it relied on unsustainable spending cuts in Medicare, tax hikes that wouldn't work as expected, and other political land mines designed only so President Obama could claim when he signed the law in 2010 that: "It is paid for. It is fiscally responsible."

Recent events are proving opponents right.

Nearly half of ObamaCare's costs, for example, are supposed to be "paid for" by spending cuts to Medicare, including $136 billion from Medicare Advantage in the first 10 years.

But since the law took effect, the administration has tried to minimize the cuts to the increasingly popular Advantage program, which lets seniors choose from a wide range of subsidized private plans, and now accounts for a third of Medicare enrollees.

Medicare's Third Rail

The administration effectively canceled the first two years' Medicare Advantage cuts with $8 billion in bonuses paid out as part of a "demonstration project" widely derided as phony. It also delayed rules changes that would have led to further cuts.’

‘The other big chunk of Medicare savings — nearly $200 billion — is supposed to come from payment cuts to doctors and hospitals. But when the Centers for Medicare & Medicaid Services' chief actuarylooked at this provision, he said such cuts were "unsustainable" because 15% of Medicare Part A providers would operate in the red by 2018.

By 2040, "half of hospitals, two-thirds of skilled nursing facilities, and 90% of home health agencies" would be losing money. Congress just permanently repealed a payment cut plan for Medicare doctors, which Congress had repeatedly delayed since it was enacted in 1997.

Even the little-known "Medicare Improvement Fund" has proved troublesome. ObamaCare eliminated this fund for a one-time $20.7 billion savings. But in 2014, Obama signed a law that recreated the fund and put more than $200 million back into it.’ - ObamaCare's Financial Crisis Is Fast Approaching, IBD, 04/15/2015

Link to the entire article appears below:

http://news.investors.com/politics-obamacare/041515-747986-obamacare-taxes-and-spending-cuts-arent-working.htm