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How the Obama Health Care Law
Threatens Older Americans Denying Senior Citizens the Right to Make Up Medicare Cuts With Their Own Money According to an August 2010 Congressional Budget Office estimate, the Obama Health Care Law will cut $555 billion from Medicare over the next ten years.1 Most senior citizens know that the law will significantly cut government funding for their Medicare. Less widely known is the law's provision allowing Washington bureaucrats to prevent older Americans from making up the Medicare shortfall with their own funds–taking away their right to spend their own money to save their own lives. The Medicare Shortfall Even before the Obamacare cuts, Medicare--the government program that provides health insurance to older people in the United States--faced grave fiscal problems as the baby boom generation ages. Medicare is financed by payroll taxes, which means that those now working are paying for the health care of those now retired. As the baby boom generation moves from middle into old age, the proportion of the population that is retired will increase, while the proportion of the population that is working will decrease. The consequence will be that the amount of money available for each Medicare beneficiary, when adjusted for health care inflation, will shrink. The Alternatives: Increase Taxes, Ration, or Allow Seniors to Add Their Own Money In theory, taxes could be increased dramatically to make up the shortfall – a proposal unlikely to attract popular and political support. The second alternative--to put it bluntly but accurately--is rationing. Less money available per senior citizen would mean less treatment, including less of the treatments necessary to prevent death. For want of treatment, many people whose lives could have been saved by medical treatment would perish against their will. The third alternative is that, as the government contribution decreases, the shortfall could be made up by voluntary payments from older people themselves, so that their Medicare health insurance premium could be financed partly by the government and partly from their own income and savings. Private Fee-for-Service Medicare Insurance As a result of legislative changes in 1997 and 2003 undertaken at the instance of the National Right to Life Committee, this third alternative became law. Under the title of "private fee-for-service plans," an option was created in Medicare under which senior citizens could choose health insurance whose value was not limited by what the government might pay toward it. These plans could set premiums and reimbursement rates for providers without upward limits imposed by government regulation.2 Such plans would not be forced to ration treatment, as long as senior citizens were free to choose to pay more for them. For information on whether it would be possible to afford health care without rationing, see here<<http://www.nrlc.org/MedEthics/AmericaCanAfford.pdf>> What About Seniors Who Can't Afford to Add Their Own Money? Medicare covers everyone of retirement age, regardless of income or assets. Yet, because of budget constraints, the Medicare reimbursement rates for health care providers tend to be below the cost of giving the care--a deficit that can only accelerate as cost pressures on Medicare increase with the retirement of the baby boomers. To cope with this, providers engage in "cost shifting" by using funds they receive in payment for treating privately insured working people to help make up for what the providers lose when treating retirees under Medicare.3 Thus, comparatively low-income workers often effectively subsidize higher-income retirees. However, when middle-income retirees are free voluntarily to add their own money on top of the government contribution through a private fee-for-service plan, those who take advantage of this opportunity stop being the beneficiaries of cost-shifting and become contributors to it.4 This puts more money into the health care system, making it feasible for health care providers to offer more below-cost care to senior citizens of limited means. Obamacare's Assault on Seniors' Right to Add Their Own Money Section 3209 5 of the Obama Health Care Law [codified at 42 USCS § 1395w-24(a)(5)(C)(i)] indirectly amended the section in existing law allowing private fee-for-service plans to set their premiums without CMS approval by adding, "Nothing in this section shall be construed as requiring the Secretary to accept any or every bid submitted by an MA organization under this subsection." Therefore, CMS may now refuse to allow senior citizens the choice of private-fee-for-service plans that charge what CMS, in its standardless discretion, regards as premiums that are too high. Indeed, the provision literally authorizes CMS, if it decides to do so, to refuse to allow private-fee-for-service plans altogether. With this dangerous provision the Obama Health Care Law could lead to elimination of the only way that seniors have to escape rationing - by taking away their right to spend their own money to save their own lives. READING THE OBAMA HEALTH CARE LAW: What Is the Exact Language That Allows the Federal Government to Limit What Senior Citizens Can Choose to Spend for Health Insurance? [Warning to ordinary human beings trying to make sense out of the Obama Health Care Law's language: it is written in extremely convoluted legalese. To figure out what is hidden in this law requires intense concentration – try not to let your head spin while you attempt to follow the explanation below (especially in the endnotes); unfortunately, it is the opposite of "plain language"! ] 1. Under a provision in effect both before and after adoption of the Obama Health Care Law, the Secretary of Health and Human Services has authority to "negotiate" the premiums to be charged by private Medicare plans ("Medicare Advantage" health insurance plans) – meaning that the Centers for Medicare and Medicaid Services (CMS) can keep senior citizens from being able to choose a Medicare Advantage plan unless that plan agrees to charge a premium acceptable to CMS [42 U.S.C. §1395w-24 (a)(6)(B)6]. Importantly, however, this authority did not apply to private fee-for-service plans [42 U.S.C. § 1395w-24 (a)(6)(B)7] – meaning that CMS had no power to impose a premium price control on private fee-for-service plans, which senior citizens could be kept from choosing only if the plans failed to meet other applicable standards. Thus, under the law before Obamacare, senior citizens could choose, if they wished, to add extra money of their own on top of the government payment in order to get health insurance less likely to ration, and Washington bureaucrats could not limit their right to do this. 2. However, Section 3209 of the Obama Health Care Law, [codified at 42 USCS § 1395w-24(a)(5)(C)(i) 8], indirectly amends the section allowing private fee-for-service plans to set their premiums without approval by CMS by adding, "Nothing in this section shall be construed as requiring the Secretary to accept any or every bid submitted by an MA organization under this subsection." This means that the pre-existing law
that effectively forbade the Secretary to exclude a private fee-for-service
plan on the basis that CMS considers its premiums to be too high has been
trumped by the new ability of the Secretary to reject "any or every" premium
bid submitted by a private fee-for-service plan. Thus, under Obamacare,
Washington bureaucrats are given the authority to limit – or even eliminate
– senior citizens' ability, if they choose, to spend their own money on
health insurance less likely to ration. 1. Congressional Budget Office, "The Budget and Economic Outlook: an Update," August 2010, at http://www.cbo.gov/ftpdocs/117xx/doc11705/08-18-Update.pdf (October 26, 2010). 2. For more information on the private fee-for-service alternative and its history, see here<<http://www.nrlc.org/MedEthics/RationinginMedicare.html>>. 3. Dobson, Allen, Joan DaVanzo, and Namrata Sen. "The Cost-Shift Payment 'Hydraulic': Foundation, History, And Implications." Health Affairs 25, no. 1 (2006): 22-33. 4. It may seem strange to describe the ability to pay more as an "opportunity." Obviously, senior citizens, like others, would prefer to pay less, not more, for health care– just as they would for any good or service. However, those who can afford to do so nevertheless frequently are willing to pay more for goods and services of higher quality. This is true of automobiles, houses, vacations, and restaurant meals. Since one can enjoy none of these if one is dead, it is entirely rational to pay more for health insurance when convinced that the higher price will give greater assurance of access to high-quality health care providers, and less likelihood that the insurance company will deny authorization or payment for treatments that are more costly but more likely to be effective and to carry less danger of deleterious side effects. 5. Patient Protection and Affordable Care Act, § 3209, Pub. L. No. 111-148, 124 Stat. 119, 460 (2010). 6. 42 U.S.C. §
1395w-24 (a)(6)(B) reads, in relevant part (emphasis supplied): (i)
Authority. Subject to clauses (iii) and (iv), the Secretary has the
authority to (Clause iv is quoted in the next
endnote.) (iv) Exception. In the case of a [private fee-for-service ] plan described in section 1851(a)(2)(C) [42 USCS § 1395w-21(a)(2)(C)], the provisions of clauses (i) and (ii) [quoted in the previous endnote] shall not apply and the provisions of paragraph (5)(B), prohibiting the review, approval, or disapproval of amounts described in such paragraph, shall apply to the negotiation and rejection of the monthly bid amounts and the proportions referred to in subparagraph (A). The "provisions of paragraph (5)(B)" incorporated by reference are: (B) Exception. The Secretary shall not review, approve, or disapprove the Paragraph (4), subparagraph (A)(ii) reads: "the amount of the Medicare + Choice [now called Medicare Advantage] monthly basic beneficiary premium"; Paragraph (4), subparagraph (B) reads: "Supplmental benefits. For benefits described in section 1852(a)(3) [42 USCS § 1395w- 22(a)(3)], the amount of the Medicare + Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B))."
8. The new subparagraph (C) is added to 42 U.S.C. §
1395w-24 (a)(5). Since the language of
subparagraph (a)(6)(B) that prevents the Secretary from "negotiating"
private fee-for-service
plan premiums is based on incorporating by reference subparagraph (a)(5)(B),
as explained in
the previous endnote, and because clause (i) of (a)(5)'s new subparagraph
(C) would prevent
subparagraph (B) from being construed to limit the Secretary's authority to
reject bids, it
effectively makes meaningless the premium negotiation prohibition of
subparagraph (a)(6)(B). |
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