Major Updates Below!

One of the many myths on the political right is that the Medicare prescription drug plan passed under President Bush was wrong and did not pay for itself. It is one of those stubborn misunderstandings which typically embed themselves into the psyche of a movement. It is a much milder form of the zealotry which backs the myths underpinning Obamacare.

Well those two myths of misunderstanding just collided, with devastating results for seniors and taxpayers.

The Bush Medicare prescription drug plan was enacted to fill a Medicare hole which was bleeding money. Without preventative and corrective drugs provided under Medicare, many people were getting them through the emergency room. The drugs were god-awful expensive via this route, and the emergency room visit costs were astronomical on top of that. This expected behavioral response to a natural need to stay alive was bleeding out Medicare.

The answer was Medicare Part D, and unlike Obamacare this plan relied heavily on the free market to enact and pay for it:

Beneficiaries can obtain the Medicare drug benefit through two types of private plans: beneficiaries can join a Prescription Drug Plan (PDP) for drug coverage only or they can join a Medicare Advantage plan (MA) that covers both medical services and prescription drugs (MA-PD).^[2] The latter type of plan is actually part of Medicare Part C and has several other differences relative to original Medicare.

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As of 2008 there were 1,824 stand-alone Part D plans available. The number of available plans varied by region. The lowest was 27 (Alaska) and the highest was 63 (Pennsylvania & West Virginia).^[5] This allows participants to choose a plan that best meets their individual needs. Plans can choose to cover different drugs, or classes of drugs, at various co-pays, or choose not to cover some drugs at all.

Medicare Plan D costs money and is imperfect, but it does rely on participants paying for their fair share, and help for  low income participants in paying for the basics. While imperfect, it is better than the expensive emergency room pharmacy plan it replaced, and apparently much less expensive to taxpayers than Obamacare:

Over the past year, I’ve repeatedly warned about the dangers of static tax analysis. That process considers changes in tax policy without considering its impact on behavior. The closure of this “loophole,” as Robert Gibbs called it yesterday, is a perfect example of this stunted thinking.

The Democrats in Congress argued that they would gain $5.4 billion in revenue by eliminating the tax break enacted in the 2003 Medicare Part D program as an incentive for businesses to keep their retirees out of the Medicare system. Instead, they have given businesses a reason to dump their retirees out of the private networks and into the Part D system now. Not only will the expected tax revenues never appear, but now we will have to spend a lot more money covering those prescriptions out of public funds. The seniors in these programs will suffer most of all, as the Part D coverage is vastly inferior to the private plans offered by businesses in the private sector.

Absolutely correct.

The other shoe to drop on seniors (like my parents) is the cutting of Part C: Medicare Advantage, the plan that allowed people to get out of the Medicare restrictions and into better plans on the government nickel:

Because the 2003 payment formulas overpay plans by 12 percent or more compared to traditional Medicare,[11] in 2006 enrollees in Medicare Advantage Private Fee-for-Service plans were offered a net extra benefit value (the value of the additional benefits minus any additional premium) of $55.92 a month more than the traditional Medicare benefit package; enrollees in other Medicare Advantage plans were offered a net extra benefit value of $71.22 a month more.[12] However, Medicare Advantage members receive additional coverage and medical benefits not enjoyed by traditional Medicare members, and savings generated by Medicare Advantage plans may be passed on to beneficiaries to lower their overall health care costs.[10] Other important distinctions between Medicare Advantage and traditional Medicare are that Medicare Advantage health plans encourage preventive care and wellness and closely coordinate patient care.[13]

But Obamacare has ‘fixed’ these plans too. Because they are better plans than standard Medicare (Parts A/B), Obamacare will start rationing services on these plans to pay for his monument to ego trip:

— My Medicare is supplemented by my former employer. Is that in danger? If your former employer offers prescription drug coverage to Medicare-eligible retirees, that benefit might be in danger. Starting in 2013, the tax break employers get for providing that benefit to retirees will be cut, increasing the likelihood employers will drop it.

You might have to pay more if your supplemental coverage is through Medicare Advantage, because government payments to those plans will decrease. You could lose extra benefits such as free eyeglasses and hearing aids.

The first death panel to ration care was Congress. This effort is now been handed off to hundreds of faceless, unelected bureaucrats who will determine what is allowable health care, and who is eligible to get it. Obamacare is one big fat exaggeration:

– My family has income of about $60,000, but we haven’t been able to afford health insurance. Can we get it now? You might be eligible for government subsidies to help you pay for private insurance that will be sold in the health exchanges that will begin operation in 2014. Premium subsidies will be available for families with incomes from $29,327 to $88,000. But there’s no help until then.

So the tax payers will be paying more for prescription drugs under Medicare D while seniors on private plans are dumped, resulting in inferior services for them. Obamacare will cut the better Medicare Advantage plans and dump people back onto the inferior (but cheaper) basic Medicare plans. And those in need of help PAYING for coverage won’t see anything for a couple of years (or more) to come.

Add in the fact we will be a broke nation in ten years and we see how bad this liberal fantasy really is.

Major Update: Since we are now following the European model of single payer health care, it is wise to look ahead and see what is in store for America under Obamacare, when it is fully realized.

Tens of thousands of NHS workers would be sacked, hospital units closed and patients denied treatments under secret plans for £20 billion of health cuts.

The sick would be urged to stay at home and email doctors rather than visit surgeries, while procedures such as hip replacements could be scrapped.

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The proposals could lead to:

10 per cent of NHS staff being sacked in some areas.
The loss of thousands of hospital beds.
A reduction in the number of ambulance call-outs.
Medical professionals being replaced by less qualified assistants.

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Meanwhile, £450 million could be saved in London by banning clinical procedures “that have little or no benefit to those receiving them, for example some joint replacements”.

Imagine that, ‘free’ health care bankrupting a modern nation, leaving it to throw its people out on the streets in their darkest hours of need. Here’s your Hope & Change folks.

Major Update 2: Looks like states are scrambling to keep what health care they have alive, while going bankrupt under the new burden of Obamacare:

Louisiana officials say a reduction in federal money to hospitals that treat the uninsured under the bill could be a death knell for their state-run charity hospital system.

In California, policymakers estimate they will have to come up with an additional $500 million a year to make necessary increases in payments to Medicaid providers.

Across the country, state officials are wading through the minutiae of the health care overhaul to understand just how their governments will be affected. Even with much still to be digested, it is clear the law may be as much of a burden to some state budgets as it is a boon to uninsured consumers.

But as I noted above, there is no boon to uninsured consumers for 2 or more years to come. People are uninsured because they cannot afford premiums, and there is no fix for that this year.
States will go bankruptbefore the Federal Government does, since they cannot print money and Obamacare falls more heavily on them. Way to go Dr O! You and your deluded liberal followers, you just gave the country a economic colonoscopy.

Major Update 3: Did I mention the country is going broke?

The realities, as former CBO Director Douglas Holtz-Eakin pointed out in The New York Times, are different. The real cost is disguised by the fact that the bill includes 10 years of revenue but only six years of spending. It includes $70 billion in premiums for long-term care that will have to be paid out later. It excludes $114 billion in discretionary spending needed to run the program. It includes nearly half a trillion dollars in unrealistic Medicare savings.

Holtz-Eakins’s bottom line: The bill will not lower deficits, but will raise them by $562 billion over 10 years. Treasury will have to borrow that money — and probably pay much higher interest than it’s paying now.

Moreover, once the bill is fully in effect, the Cato Institute’s Alan Reynolds points out, its expenses are likely to grow at least 7 percent a year — significantly faster than revenues. At that rate, spending doubles every 10 years.

No wonder that Moody’s declared last week that the Treasury is “substantially” closer to losing its AAA bond rating.

It’s not only the federal government that is heading toward insolvency. State governments will have to spend more under the health care bill — $735 million in Tennessee alone, according to Democratic Gov. Phil Bredesen.

We have two years to turn this boat around before we go over the falls

Tags: Medicare Advantage, Medicare Part C, Medicare Part D, Obamacare, Prescription Drugs