Obamacare: Medicare (Continuing series by Nancy Thorner and Jane Keill)

August 6, 2012


According to Wikipedia, “Medicare is a national social insurance program, administered by the U.S. federal government Department of Health and Human Services since 1965, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease. As a social insurance program, Medicare spreads the financial risk associated with illness across society to protect everyone, and thus has a somewhat different role from private insurers, which must manage their risk portfolio to guarantee their own solvency.”

In an act of cowardice on both sides of the aisle, and the propensity to push hard decisions calling for positive action into the future, legislators are delaying action until another time.  With their flawed thinking that putting off difficult choices will bring about different results with the same players, they have put Medicare under the chopping block in a game of political chicken.

How could this be so?

In August, 2011, President Obama signed the Budget Control Act (BCA) of 2011 which allowed him to increase the debt ceiling by up to $2.8 trillion.

Part of this act was the creation of a Super Committee charged with finding an additional $1.5 trillion in deficit reduction costs. If this committee did not agree on a plan, automatic cuts of $1.2 trillion would be triggered through the sequestration procedure.

The August 2011 deal was agreed to by both Congress and the President.

Sequestration was intended to be an action-forcing mechanism to get Congress and the president to act to bring the national debt under control. Sequestration is due to go into effect on Jan. 2, 2013, just five short months from now.

That means automatic cuts will be drawn equally from the Defense Department ($54.7 billion each year from 2013-2021) and $54.7 billion from the rest of the budget, which includes many social and other non-defense programs. .

On Wednesday, July 18, 2012, legislation (Sequestration Transparency Act) sailed through the House 414-2 to force the Obama administration to detail exactly how it would carry out mandated budget cuts of $1.2 trillion.

Sens. John Thune (R-SD) and Jeff Sessions (R-AL) are the lead sponsors of the Sequestration Transparency Act in the Senate. So far President Obama has enjoined Congress to tackle the sequestration in the hope that if Congress fails he can then skirt all blame, despite having failed to submit a responsible budget to Congress.

Notwithstanding the tremendous damage to this nation’s defense and preparedness, if the tenets of the Budget Control Act of 2011 are implemented, the Pentagon’s future fiscal affairs would be deeply affected.  For should the sequestration deal end in an impasse, cutting $54.7 billion from our nation’s defense funding would devastate both safety and security.

Just as unacceptable are the identical proposed cuts of $54.7 billion from social and other non-defense programs. As a rule, Democrats frown upon cuts in domestic programs; Republicans frown on gutting national defense.

One of the sequestration rules from the failed Super Committee calls for a 2% cut across the board for physician providers. Most of these cuts on either side of the programs don’t begin until January 2013, because Obama and the Democrats do not want people to be aware of them until after the 2012 election.  

At this time, Medicare is projected to go broke by 2024 (or, 2016, depending on who is doing the calculating). That’s either 12 years, or 4 years. With all the scheduled cuts applicable to Medicare, its trust fund will be gone in short order.

There are two new Medicare taxes included in Obamacare:

1. Medicare Investment Income Tax: a 3.8% surtax on investment income over $200,000/$250,000,

2. Medicare Part A Hospital Tax: rises by .9% to 2.35% for earned income exceeding $200,000/$250,000

In addition, the Medicare Payroll Tax will go up an additional $86.8 billion, as of January 2013.

In 2007, then Sen. Obama (D-IL), on the campaign trail, in promoting his universal health care plan, made the promise that “the typical family will save up to $2,500 every year’ in health care costs.” In fact, studies have shown that the average costs of family health care have already gone up $2,200.

Championed by Republicans in 1997, Medicare Advantage offers seniors an escape valve from the government-run Medicare insurance program, making Medicare Advantage a popular program for seniors. Medicare’s own actuary reported that Obamacare would eventually force more than 6 million seniors off their private plans and back onto traditional Medicare as insurers flee the market.

Medicare Advantage plans are actually being papered over before seniors realize that the Obama administration is pumping $8.3 billion through “bonuses” to Medicare Advantage plans, solely to shore up the program before the November elections. This extra bonus money is front loaded and will fill in more that 70% of Obamacare’s scheduled Medicare Advantage cuts, enabling the plan to be kept up and running through the election. Through Obamacare, billions of dollars will be quietly drained from the Medicare Advantage program until it is gone, but it will probably be done over a long period of time so no one will notice. 

The Baby Boom generation has begun to turn 65 and is starting to claim health coverage under the Medicare plan. How will the Federal government control medical costs under Medicare with all these additional beneficiaries?

As indicated in our Obamacare series article on “Death Panels”, IPABS and the Mandate Task Force will now control what medical benefits you may receive.

In our Obamacare article, “You Can Keep Your Doctor”, your physicians, if you have them, will receive less and less for the patient care they deliver. This applies not only to Medicare patients, but everyone else who will be covered if healthcare is nationalized through the Federal government.

The problem is, the government won’t be able to control the costs. The CBO (Congressional Budget Office) has already reported that the original Obamacare numbers were false. The original projected $940 billion 10-year cost has been shredded. The forecast by the CBO in March of 2012 was that the program will cost approximately $1.75 trillion more than originally predicted (an 87% overrun) and the program has only been in effect for 2 years.

HHS has already discontinued the Long-Term Care portion of Obamacare (CLASS), because they couldn’t find a way to pay for it. And, the program hasn’t even gone fully into effect yet. Established in March of 2010 the CLASS was axed on October 14, 2011 as too expensive, even though when implemented the CBO estimated that the CLASS long term care provision of Obamacare would reduce the deficit by $70 billion.

Some of the new Obamacare taxes, however, have already begun to take effect and are being accumulated. Where do you suppose that money is being kept? In Al Gore’s infamous ‘lockbox’? – waiting patiently for its day to be called up? Or, is it being drained away by greedy politicians who cannot stand to see money sitting there unused?

Will it be siphoned away like the money for Social Security was? Will it be there when you need it?

Or, will Obamacare become just another slush fund to be used today for continued Federal spending and be gone for future generations when they need it?

Will our children and grandchildren get any of the benefits while they are paying the trillions in dollar debts accrued by a national health care program?

In the meantime, the current load of Democrat politicians, who passed this behemoth, will be relaxing in their retirement, with their taxpayer pensions and their very own taxpayer paid private health care plans.

For the last several years, Medicare Fraud Strike Task Force offices have been actively investigating fraudulent Medicare claims across the nation. For a long time, everyone talked about Medicare fraud; now the Task Forces are actually doing something about it.

There have been recent reports of Medicaid fraud in both California and Pennsylvania. In California Medi-Cal and Denti-Cal, insurance fraud is ongoing and is resulting in prison terms for doctors and dentists. In Pennsylvania, a 35-year-old ambulance driver was charged with trying to defraud Medicare out of over $5.4 million, from 2006 to 2011.

Congress heard on March 2, 2011 how Medicare Fraud was “Incredibly Easy” to commit. Medical services and claims which have been falsely submitted are exploding in the U.S. Medical equipment fraud is especially easy to commit. The primary skill required is knowledge of basic data entry on a computer.

Although Medicare has no official estimate of the amount of money lost to fraud each year, estimates put the number in the tens of billions — “60 Minutes” estimated abut $60 billion in 2009.

Most likely the amount of money already proven to be falsified is a small representation of what is probably out there – which simply shows that Medicare has not been run efficiently and effectively as many politicians like to claim. Think how much money has been wasted since 1965.

It is folly to believe that Medicare, established in 1965 as a government insurance program, could ever have been run without corruption, waste and fraud. In the first place there is no competition in government-run programs to keep costs in check.

Without this enormous waste of tens of billions of dollars in Medicare waste alone, perhaps more money would be available to spend on improving this nation’s infrastructure. But wasn’t much of the stimulus money targeted for shovel ready projects?

This proves our point.  If the government is so inept at handling Medicare and distributing stimulus monies to supposedly benefit the American people, how in the world can the government handle all the complexities of the 2000+ pages of Obamacare?

 Government is not known to have the King Midas touch.

In contrast, most everything our government touches turns to ashes as taxpayers’ money is spent carelessly like there is no tomorrow; as taxpayer money is further stolen from its source of funding through fraud and waste.

The biggest question is:  What will Medicare be really like if Obamacare is fully implemented? 


Additional articles in Obamacare series:


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