ACA Medicare "Cuts" Clarifications

As the rhetoric about Medicare continues as a part of the presidential campaigning, questions come up frequently about the reference to the $716 billion reduction in Medicare spending due to the Affordable Care Act. Many have asked for a clearer explanation about the reduction. Listed below is information supplied by Sarah Lock with the AARP Office of Policy Integration from the Center on Budget and Policy Priorities about the "cuts".

The Congressional Budget Office (CBO), the non-partisan score keeper on federal budget issues for Congress, determined in July 2012 that the health law is expected to reduce Medicare spending by $716 billion from 2013-2022. But that DOES NOT MEAN the health reform law is cutting the Medicare program. Medicare spending will STILL increase each year, but it is growing at a slower rate than it would have without the new health care reform law. According to Kaiser Health News, instead of Medicare growing by 6.8% in 2010-2019, as it would have before the health care reform law passed, it is now expected to grow by 5.6%. Nothing in the health care reform law takes any money from the Medicare Hospital Insurance Trust Fund either.

Kaiser Health News reports that the $716 billion reduction in future growth of the program from 2013-2022 comes from reducing payments to providers:

$260 billion less for hospitals
$156 billion less for Medicare Advantage, the private insurance plans in Medicare
$66 billion less for home health
$39 billion less for skilled nursing services; and
$17 billion less for hospice.

Kaiser says the health care reform law “does not make any cuts to the amount of benefits beneficiaries receive and adds some new benefits, including closing the "doughnut hole" gap in Medicare prescription drug coverage, and new preventive services, such as an annual wellness visit with a physician.”

Presidential Candidate Mitt Romney says that he would rescind the $716 billion of reductions to future Medicare spending.  In addition, the Romney campaign continues to imply that the cuts are cuts in benefits to beneficiaries.  Again, they are not.   They are cuts in provider reimbursements.