DNC - GREGG AND HATCH: Making up numbers, defending lies on Medicare

Please see below for a fact check on comments made by Senators Gregg and Hatch this afternoon on the Senate floor, bringing new, unfounded numbers to the table and continuing to spread fear and lies on Medicare savings:

RHETORIC: Sen. Gregg Explained That His Hurried Staff Came Up With $2.5 Trillion Number As Estimate Of Senate Bill Cost. "Now, when my staff took a look at this bill and we only had a brief time to do it, obviously, last week and came up with that number, my budget staff, people said, on the other side of the aisle, regrettably, no, that's a bogus number. The number is $840 billion. It's not a $2.5 trillion bill. However, it is $2.5 trillion." [Senate Floor, 12/2/09]


Claim That Senate Bill Would Cost $2.5 Trillion Was Generated By Senate Budget Committee Republicans. Fox News reported that, “Republicans have countered the CBO estimate with a figure of their own: $2.5 trillion, an estimate that comes out of the Senate Budget Committee minority's analysis of Reid's plan.” [Fox News, 11/19/09]

WSJ: CBO’s Estimate Of Senate Bill Is $848 Billion, Cuts Deficit By $130 Billion. The Wall Street Journal reported that, “Senate Majority Leader Harry Reid set the stage for a climactic debate in the Senate over health care by unveiling a 10-year, $848 billion bill that would extend insurance to 31 million Americans without coverage…In a boost for the bill's prospects, the CBO estimated the Senate measure would reduce the federal budget deficit by $130 billion over the next decade, and additional amounts over the second 10 years of the program. It achieves that in part through a new Medicare payroll tax and a tax on high-value insurance plans, which has aroused strong opposition…To help ease the financial burden on workers, Mr. Reid lowered the maximum amount the bill would require them to spend on premiums, capping premiums at 9.8% of income, down from 12%.” [Wall Street Journal, 11/19/09]

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RHETORIC: Sen. Gregg Claimed Medicare Savings Would Not Be Used To Make Medicare More Solvent. "fully implemented, a trillion dollars, and then over a 19-year period, the two decades, by $3 trillion, instead of using those moneys, those seniors' dollars to try to make Medicare more solvent, they're going to be used for the purposes of expanding and creating a new entitlement and expanding Medicaid...Why would you use medicare savings, reductions in medicare benefits, which well definitely affect recipients for the purposes of creating a new program rather -- creating a new program rather than making medicare more solvent and if -- solvent, and if you're going to do that in the first place." [Senate Floor, 12/2/09]


AARP: “Budget Experts Say, Without Cutting Guaranteed Benefits, Both Bills Shore Up The Solvency Of The Medicare Trust Fund For Five Additional Years.” In the AARP Bulletin Today, it was noted that, “[i]n fact, budget experts say, without cutting guaranteed benefits, both bills shore up the solvency of the Medicare trust fund for five additional years.” [AARP Bulletin Today, 12/1/09]

2008: Medicare Chief Actuary Told Congress Paying Medicare Advantage Plans Only As Much As Traditional Medicare Would Lower Premiums, Extend Solvency. On April 1, 2008, the Chief Actuary of the Centers for Medicare and Medicaid Services, Richard Foster, testified to Congress that, “if the law were changed such that the Medicare Advantage benchmarks will set up the level of the same cost as fee-for-service, then we estimate that would extend the solvency of the HI [Hospital Insurance] trust fund by about 18 months.” When asked how much Medicare Part B premiums had been increased because of the increased cost of Medicare Advantage, Foster replied, “we estimate that as of 2009, the additional premium for Part B associated with the higher benchmarks for Medicare Advantage is about $3 per month.”  [Testimony, Richard Foster: The Financial Outlook for Medicare, House Ways & Means Committee Subcommittee on Health, 4/1/2008]

New York Times: Reform Will Enhance Drug Coverage, Reduce Premiums, and Help Keep Medicare Solvent. “Far from harming elderly Americans, the various reform bills now pending should actually make Medicare better for most beneficiaries — by enhancing their drug coverage, reducing the premiums they pay for drugs and medical care, eliminating co-payments for preventive services and helping keep Medicare solvent, among other benefits.” [New York Times, Editorial, 9/27/09]

RHETORIC: Sen. Hatch Claimed That Medicare Advantage Subsidies Were Required To Extend Care Coverage To Rural America. "So we did medicare advantage and all of a sudden we were able to take care of those people. Yes, it cost more, but it's because we had to go into the rural areas to do it...this would, in my opinion have a massively disruptive effect on people who get medicare because you're going to reduce it, the assumption, the scoring is that there will be a reduction in medicare advantage payments of approximately $162 billion, I believe it is, and there's no way you're going to keep getting medicare -- the advantages of medicare advantage if you have that type of reduction in payments." [Senate Floor, 12/2/09]


Medicare Advantage Health Economist: 86 Percent Of Extra MA Payments Went To Profits, Only 14 Percent Went To Extra Benefits – “Cuts To MA Should Be A No Brainer.” Health Economist Austin Frakt, a professor at Boston University, has studied Medicare Advantage plans extensively and wrote on his blog about his findings: “Payment to MA plans has gone way up since 2003. Did the payment increase largely benefit beneficiaries or not? This is a current political and policy debate, about which much has been written in the media (both traditional and blogospheric). It turns out the answer is known and quantifiable. My work (with Steve Pizer and Roger Feldman) shows that for each additional dollar spent by the federal government (taxpayers) on the program since 2003, just $0.14 of it can be attributed to additional value (consumer surplus) to beneficiaries (see also: findings brief). What do we make of the other $0.86? That goes to the insurance companies but doesn’t come out “the other end” in the form of value to beneficiaries. In part it is accounted for by the costs of the additional benefits and in part it is captured as additional insurer profit. So, do higher MA payments produce little value to beneficiaries, as Obama claims, or are the benefits they fund important to maintain, as Republicans would have us believe? The balance of the evidence is on Obama’s side. In fact, it is a landslide: for each dollar spent, 14% of the value reaches beneficiaries and 86% of it goes elsewhere (profit or cost). Cuts to MA should be a no brainer.” [Incidental Economist - Austin Frakt, 9/28/09]

Medicare Advantage Provides Extra Perks, Like Free Gym Memberships, That Are Subsidized By The Government And The High Costs Of The Plans Are Passed On To Seniors. "Seniors in this Sun Belt retirement haven and across the country revel in the free perks that private insurance companies bundle with legally mandated benefits to entice people 65 and older to forgo traditional Medicare and sign up for private Medicare Advantage policies. The trouble is, the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care. ... In a health-care debate defined by big numbers and confusing details, the prospect of losing benefits such as a free gym membership through the Silver Sneakers program is tangible, and it has spooked some seniors, who are the nation's most reliable voters and have been most skeptical about reform." [Washington Post, 10/15/09]

The AARP Supports Cutting Back Subsidies To Private Insurers In Medicare Advantage So They Are On A Level Playing Field With Medicare. AARP spokesman Jordan McNerney said: "We are in support of cutting back the subsidies to private insurers over time so they compete on a level playing field with traditional Medicare." [Los Angeles Times, 8/19/09]

GOP Opposition To Medicare Advantage Competitive Bidding Is Interesting: “Republicans Have Mounted A Ferocious Defense Of The Market’s Right To Continue Burning Through Taxpayer Dollars.” The Washington Post’s Ezra Klein commented on Republican anger at the prospect of competitive bidding to lower overpayments to Medicare Advantage programs: “[i]t is also an interesting moment of insight into the conservative philosophy on these matters. The problem with government programs, we're often told, is that they are expensive and wasteful, and the private market could do better. But faced with an instance where the government program proved relatively lean and efficient, and the private market expensive and wasteful, Republicans have mounted a ferocious defense of the market's right to continue burning through taxpayer dollars.” [Washington Post – Ezra Klein, 9/24/09]

2008: Congressional Medicare Commission: Private Medicare Advantage Programs are “Much Like Traditional Medicare, Except At A Higher Cost.” According to a report by the Medicare Payment Advisor Commission (MedPAC), “By increasing payment to levels significantly above Medicare, we have changed the signal we are sending to the market: instead of efficiency-enhancing innovation, we are getting plans…that are much like traditional Medicare, except at a higher cost.” [Medicare Payment Advisory Commission, Report to the Congress: Medicare payment policy, 2008]