White House touts health reform's Medicare savings, defends math

The Democrats' new health reform law will save Medicare hundreds of billions of dollars and extend the life of the program more than a decade, according to a report issued Monday by the Obama administration.

The report — much of which simply repackages April estimates from the chief actuary at the Centers for Medicare and Medicaid Services (CMS) — marks the latest White House effort to rally seniors behind the new reform law in the face of polls indicating Medicare-aged folks remain most threatened by the changes.

Indeed, a recent survey conducted by the Kaiser Family Foundation (KFF) found 37 percent of seniors feel "angry" about the reforms, while just 26 percent of younger Americans said the same.

Launching Monday's report, Health and Human Services (HHS) Secretary Kathleen Sebelius said the seniors' concerns are based on "a lot of misinformation" planted by reform critics. The law, CMS says, will save Medicare $8 billion by the end of 2011, and $575 billion during the next decade, largely by improving the quality of care and preventing waste and fraud. Guaranteed Medicare benefits, she noted, won't be cut at all.

"Because we began making the changes right away, the savings add up fast," Sebelius told reporters during a Monday phone call announcing the report.

The reforms will also extend the life of Medicare's hospital fund by a dozen years, CMS says. In 2009, the Medicare trustees projected Medicare's hospital trust fund would run dry by 2017. CMS now says that fund is sustainable through 2029. This year's trustee's report, delayed due to passage of the health reform law, is expected to be released later this week. 

Conservative critics, however, immediately dismissed the report as a politically motivated attempt to sell health reform to skeptical seniors.

They noted Richard Foster, chief CMS actuary who crunched many of the figures cited Monday, has been wary of the agency's accounting methods. For instance, the savings the law provides to Medicare's hospital benefit, Foster wrote in April, "cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions."

Republicans have latched onto those comments to blast Monday's CMS report.

“The Administration's own actuary and CBO have said over and over again that you can't ‘double-count’ the Medicare cuts by claiming they extend the life of the Medicare program and at the same time fund a new entitlement program," Sen. Charles Grassley (Iowa), senior Republican on the Finance Committee, said in a statement. "That’s common sense even if the experts didn’t say it. 

"It’s intellectually dishonest," Grassley added, "to try to have it both ways."

Administration officials defended their math Monday, with Jonathan Blum, director of CMS' Center for Medicare Management, telling reporters the accounting represents "consistent budget convention."

Sebelius added that a "growing consensus" among lawmakers that healthcare costs need reining in has left White House officials "more optimistic" than Foster.

"He has a different interpretation," she said.

Much of the partisan debate hinges on semantics. Democrats have said repeatedly that seniors wouldn't lose any guaranteed Medicare benefits under the new reform law. Yet seniors enrolled in the Medicare Advantage (MA) program — where the government pays private insurers to cover Medicare patients — could lose benefits like dental and eye care not covered by the traditional program. Such benefits have made MA plans enormously popular among seniors, but have also cost Medicare, on average, 14 percent more per beneficiary — subsidies that come largely at the expense of seniors enrolled in the traditional Medicare program.

Another wildcard in the Medicare savings debate revolves around the so-called sustainable growth rate (SGR), the formula that updates Medicare payments to doctors each year. At the end of November, according to the SGR, doctors will begin receiving a 21 percent cut in Medicare payments — a cut congressional leaders say they will prevent after the mid-term elections.

Monday's report assumes the 21 percent cut will take hold in December, producing more projected savings than will likely be realized. 

Blum defended that calculation Monday, arguing that CMS simply based its estimates on current law. 

"We're working with Congress," he added, "for a long-term [SGR] fix."