Medicare Savings? Cadillac Plans? Fact-Checking Mass. Senate Race Claims

warren brown debate

Democratic challenger Elizabeth Warren speaks during a debate with Republican incumbent Sen. Scott Brown in Springfield. (Elise Amendola/AP)

The sweeping federal health care law is a key point of disagreement between Sen. Scott Brown and his challenger, Elizabeth Warren.

Brown, a Republican, vows to repeal the law and let states craft their own health care reform plans. Warren, a Democrat, supports the federal Affordable Care Act and says the country must stay with the gains already made under the law.

In the last two weeks of this campaign, you’ll likely hear many competing claims about how the law will affect you; here are two.

The first claim is about Medicare, the government program of health coverage for most Americans 65 or older. The political action wing of Boston-based Community Catalyst is out with a report that says repealing the Affordable Care Act (ACA for short) would hurt seniors.

Community Catalyst Action Fund Director Rob Restuccia says seniors would see their Medicare costs increase about $500 a year if the law is repealed. Medicare members who take a lot of medications and hit the “donut hole” could see their costs increase up to $1,700 a year, according to projections from the Obama administration.

“We know that the drug costs are lower (under the ACA),” Restuccia says. “We know that there’s preventive services that seniors are getting, but also their premiums are lower. Put it all together and it’s a big deal for seniors.”

And here’s the reason that Restuccia is sending out this analysis.

“We think that Sen. Brown and others are really distorting what the Affordable Care Act does.”

Restuccia’s right: Brown doesn’t talk about Medicare saving seniors money. He talks about Medicare cuts. Brown calls the $716 billion that the Congressional Budget Office says Medicare plans to save through lower reimbursements to doctors, hospitals and health insurers “cuts to Medicare.”

There’s the competing claim about what happens to Medicare under the ACA: savings versus cuts.

The second claim you’ll hear has to do with everyone who has private insurance, usually through their employers. The federal law includes a tax on Americans with what are known as “Cadillac” or top-of-the-line health insurance plans. A report from the Pioneer Institute in Boston concludes that half of Massachusetts residents will be considered as having Cadillac plans and have to pay that tax, starting in 2018.

“We have extremely robust and generous health care plans (in Massachusetts)”, says the report’s author, Josh Archambault. “We have historically and we expect to continue in the future. As a result, most people will probably be spending within the tens of thousands of additional tax dollars because their health insurance is so generous.”

Archambault’s predictions about “tens of thousands of dollars” in additional taxes won’t hold if the slower premium growth we’ve seen in the last few years continues and if employers continue to shift more health care costs to employees (through higher deductibles and co-pays). But even if premiums only increase on average at 4.8% a year, Archambault says, half of Massachusetts residents with private coverage will pay a Cadillac tax of some amount.

Republicans say Warren is conveniently ignoring the Cadillac tax as she heralds the ACA’s benefits.

I’m going to expand the second competing claim to this: Will the ACA increase or lower costs for Massachusetts residents? We don’t have an answer that is specific to Massachusetts. The Congressional Budget Office says the ACA will save private and public insurance plans $84 billion over the next 11 years.

Restuccia says, “the Affordable Care Act will reduce costs overall for everyone. Some will see small rises in premiums, but overall, when you look at the CBO reports, there are significant savings for almost all consumers.”

But Archambault suggests that even if there some savings, “Voters should think through the financial situation of any health care program going forward. As a nation, can we afford the kind of spending that we have in the current programs and any proposed new programs?”

Opponents of the law argue that there’s little proof the law will make health care more efficient and great concern that the ACA is creating a set of new commitments the country can’t afford to keep.

Supporters counter that the ACA’s complex plan of coverage, focused on prevention, with payment based more closely on delivering better care, is the country’s best hope to reduce health care spending over time.

So back to Brown vs. Warren…Is her support for the ACA or his vow to repeal the act an issue you’ll think about as you walk or drive to the polls in two weeks?

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  • julie anderson

    Last time when they have launched the medicare plans it is good and even seniors gained money too;But now they are been risk!

  • Dennis Byron

    In addition to the major methodological problem (see my other comment) with the Community Catalyst report on the effect of PPACA on Medicare beneficiaries (it left out 25% of us seniors and it claims that few people in the donut hole qualify for Prescription Advantage-PA), there are numerous factual errors, omissions and misleading statements in the Community Catalsyt report:

    1. The most PPACA saves someone in the donut hole this year is $2000 and in 2021 $3000 (depending on the exact size of the hole in 2021; it is supposed to get bigger). You can only save the kind of money claimed by Catalyst by spending almost all the way through the hole (about $7000 worth of drugs at retail this year; maybe $8000 by 2021). Only about 15,000 seniors in Massachusetts out of 1,100,000 of us this year spend that much (and I believe most of them would be eligible for PA leaving the number of people saving the money claimed at a few thousand out of 1.100,000)

    2. None of the prescription drug savings claimed in the Catalyst report take PA into account. Whether I am correct that many seniors qualify for PA or whether Catalyst is correct that only a few qualify for PA, there are certainly SOME people on PA in the hole but the Catalyst report does not factor in those savings

    3. Almost all the so-called “no cost” preventive care cited by Catalyst was already no cost in Massachusetts (and the vast majority of this preventive care was flu shots)

    4. Catalyst claims that seniors pay a $140 deductible and 20% co-pays for services (that is true for Part B services only) but almost all Massachusetts seniors (well over 90%) get some kind of private supplemental insurance so are already not paying that deductible and those co-pays (and are therefore not “saving” it)

    5. Catalyst’s explanation on page 3 of how the donut hole works is incorrect. That doesn’t affect the claimed savings one way or the other but may mislead a senior

    6. Catalyst leaves out the cuts to Medicare to be made by the death panel

    7. I believe Table 1 is a national average, not Massachusetts data

    8. No where in the Catalyst report is the effect of the Medicare Savings Program factored in (the seniors on FFS Medicare not paying a monthly Part B premium cannot “save” it)

    9. No where in the report does Catalyst mention that low income seniors are typically (depending on assets) exempt from paying Part D premiums, protected totally from the donut hole and pay nominal co-pays (even middle income seniors in Massachusetts get many of these benefits from PA irrespective of assets which I why I don’t undersstand Catalyst’s claim that few seniors in the donut hole qualify for PA. Catalyst is apparently making some assumpiton that only high income seniors have high drug costs?)

  • Dennis Byron

    The report to which you link from a group called Community Catalyst is a total deceit. It purposely leaves out 200,000-300,000 Massachusetts seniors (see footnote 1 of the report) — disproportionately the poorest of us seniors — on Part C Medicare health plans. (You know, this the seniors already getting the global-payment/ccordinated-care- type plans glorified by PPACA advocates and the Massachusetts goo goos that recently gave you the price-fixing legislation here.)

    Community Catalyst claims you cannot estimate the cost to Part C Medicare health plan benefiticaries of PPACA but according to the Medicare actuary (call John Schatto in Washington and ask for his October 2010 memo on the effects of PPACA on Medicare), he did it. Schatto says — based on national averages — the higher prices paid by the 200,000-300,000 Part C Medicare health plan subscribers because of PPACA will basically wipe out any so-called savings to be realized by Part A/B Medicare Fee for Service beneficiaries from PPACA due to the cuts being made to hospitals and nursing homes and the death panel.

    Also ask John Schatto for his boss’ (Richard Foster’s) analysis that the Part A/B cuts are unlikely to be made (so there will be no savings for FFS Medicare A/B beneficiaries and PPACA will result in a net increase for those on Medicare on average).

    And ask HHS’ Nguyuen Ngyuen (he’s the guy mentioned in Footnote 3) how the effects of Medicare Savings Programs and state pharmaceutical assistance programs are factored into these calculations. The answer is, “They are not.” The Community Catalyst report claims that few of the people in the donut hole qualify for the Massachusetts’ pharmaceutical assistance program (see footnotes 4, 6 and 7). I can’t imagine how Community Catalyst reaches that conclusion

    So particularly in Massachusetts, these claimed savings are basically zero and/or — if Foster is right — negative.

  • FrankT

    Speaking of fact-checking, the Pioneer Institute’s report
    grossly mischaracterizes the “Cadillac tax” as a direct tax on individuals. In fact, the tax is assessed on employers and insurers, not
    individuals. Sen. Brown has repeated Pioneer’s
    fallacy in his debates with Elizabeth Warren, and WBUR appears to repeat it
    above. While a case can be made that the
    tax will be indirectly shouldered by employees, the reality is more
    nuanced. In a Washington Post Op-Ed piece (12/28/09), MIT Economist Jonathan
    Gruber detailed the tax’s benefits, including the positive impact it may have
    on workers’ wages in the long-run. Despite one’s opinion of the tax, it’s important that the basic facts not be distorted.

    • Josh Archambault

      Frank, thanks for the comment on our report. As you will see in the brief, we do make it clear the tax falls on the sponsor of the plan.
      We brought it down to the individual level to make it easier to understand for folks. As it seems you agree in your comment on Pioneer’s blog, most of the tax cost will be passed onto employees. So what is so grossly inaccurate? Won’t they end up paying the tax indirectly?

      I have posted some additional thoughts on the tax issue for both campaigns to consider: