July 12, 2012
One of the most criticized and least understood parts of the Affordable Care Act, sometimes derogatorily called Obamacare, is the $500 billion reduction in Medicare costs. What this does not mean is that basic Medicare benefits are reduced. They are not.
Hospital and medical insurance will continue, untouched by the $500 billion reduction. In fact, Medicare beneficiaries, on average, will save more than $350 annually because of increased payments for out-of-pocket costs under the prescription drug program (closing the donut hole).
The $500 billion reduction consists of savings in extra subsidies to Medicare Advantage plans, a slower rate of growth in payments to health care providers (hospitals, doctors, etc.) and greater efforts to reduce waste, fraud and abuse. (Medicare Advantage plans cover vision, hearing, dental and other costs that are paid for by people who want and can afford extra benefits not covered by basic Medicare.)
The purpose of the ACA is to provide better, less costly care to more people. Clearly, that has direct costs, but indirect savings are projected to more than cover the increase.
Some opponents of the ACA are either uninformed or are willfully distorting the facts. Don’t be misled.