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400 Billion Dollars in Cuts to Medicare? “No. Thank You, President Obama!”

In July of 2011, President Obama offered Republicans cuts to Medicare, Medicaid, and Social Security. The written offer is HERE.

Last week, President Obama, made a similar offer to Speaker Boehner.  The paper of record described this as a bold set of demands. Republicans rejected it as insufficient. This writer’s initial rejection consisted of a rejection of the secrecy about President Obama’s proffered cuts to Medicare and other entitlements of about 400 billion dollars. Why be mysterious, Mr. President?

The July 2011 offer included 150 billion dollars in cuts to providers. If this is part of yesterday’s offer, will doctors refuse to take new Medicare patients, if their payments are cut? Will they go and work in foreign countries, or take early retirement?  The July 2011 offer included 150 billion dollars in cuts in Medicare premiums, copays and deductibles.  If this is also part of yesterday’s offer, will patients forego food, rent for premiums. Will patients forego seeing the doctor to avoid copays and deductibles? Both of these two cuts directly impact the quality of healthcare for Medicare recipients and possibly their quality of life. Is that why President Obama has been mysterious as to the cuts and their specifics?? These cuts would represent broken promises made to Medicare recipients.

The July 2011 offer included 125 billion dollars in cuts to Medicaid, in a reduction to “Medicaid FMAP“. Since low-income folks who depend upon Medicaid will be impacted by those cuts, will these also be included in the 2013 cuts/deal with the Republicans?  Because if they are, they represent a betrayal of the promise to provide equality of access to healthcare for people of all social and economic classes.

In July 2011, President Obama offered to alter the age of eligibility for Medicare. In addition, he offered to adjust premiums collected for services, and benefits currently covered under Part B and Part D. These offers represent broken promises. Is that why President Obama does not discuss the specifics of 400 billion dollars in cuts to Medicare and entitlements? The paper of record says that the proposed cuts are the same as offered in 2011. What are we to think then? Why of course they are. A President can save a hundred billion dollars by raising the Medicare age to 67. (148 Billion dollars between 2012-2021.)

Back in 2011, the President and his staff refused to be specific about the cuts they had proposed to Medicare, Medicaid and Social Security. In hindsight, I could guess that they might have felt ashamed to have offered to cut into timbers of the remaining social safety net superstructure. The failure to be transparent and specific about the nature of the cuts proffered to the Republicans now makes sense. Why discuss openly such shameful acts?

But what does it mean that we have such inequality? ……..That we would nick the super wealthy for 160 billion a year and the middle class for 40 billion a year and call that fair? ……….They will trade us half a yacht for a whole, life-saving Medicare surgery! And you can wait two more years to be eligible for the surgery!

Updated, Sunday, December 2nd, 2012:

A Republican counter-offer and a note about the Democrats’ key strategist, Jack Lew.

In response to the President’s offer of 400 billion dollars in cuts to Medicare and other entitlements, the Senate Minority Leader has offered to raise Medicare’s eligibility age 2 years, to means test Medicare, and to institute a benefit cut to Social Security through applying a chained CPI. This is basically the Democrat July 2011 final offer!  They also demanded to block grant Medicaid.

In a hint at where this is headed, a NYTimes article, Aide to Obama Faces Big Test In Fiscal Talks, we learn that Jack Lew is the strategist. Unfortunately, in the past, he was responsible for offering to raise the Medicare eligibility age from 65 to 67. Here is the quote:

“The challenge now for Mr. Lew — and for Mr. Obama — is to forge an agreement that does not cut too deeply into the entitlement programs that Democrats cherish. Like Mr. Obama, Mr. Lew is a pragmatist; one person familiar with his thinking said he had previously expressed willingness to raise the Medicare eligibility age from 65 to 67, a move that many liberals oppose.”

We also learn in the same article that Mr. Lew was involved in the July 2011 negotiations over the debt ceiling and that he was an aide to Tip O’Neill during the 1983 deliberations which resulted in raising the Social Security age of eligibility from 65 to 57.  He worked for Citigroup before being asked to serve in President Obama’s administration. In my opinion, I expect a repeat performance from Mr. Lew.  (Wealthy family=>Harvard=>cuts to SS in 1983 w/Tip O’Neill=>Wealth=>White House budget advisor 1990s=>Citigroup=>White House Key Strategist for long term deficit reduction cuts.)

Meanwhile, to scare all of the buffalo into the White House trap, Plouffe sent out a really scarey email:

And in a message to the millions of people subscribed to the White House e-mail list, David Plouffe, a senior adviser to Mr. Obama, urged supporters to keep the pressure on lawmakers and warned of the dire consequences if the negotiators were unable to find common ground.

“Unless Congress acts, 114 million middle-class American families are staring down a tax increase starting January 1,” Mr. Plouffe wrote in the e-mail.

The real victims are the unemployed who stand to lose their UI at the end of this year. This phoney crisis is becoming more UI hostage taking, and income tax hike blackmail. But this phoney crisis, if it becomes a powerful lever for long-term cuts to important programs, will have negative impacts too. Negative economic projections , which are the basis for deficit hysteria, can become a self-fulfilling prophecy.

In a Politico article, “No Medicare Hit For Seniors? Good Luck with that.” (By Jennifer Haberkorn & Paige Winfield Cunningham.), the authors reviewed possible significant cuts to Medicare which might approximate the cuts demanded by the Republicans and proffered by the Democrats, although undefined by the latter. Their basic theme is that if either party claims that Medicare can sustain significant cuts without reducing benefits to recipients, they are being unrealistic. (I cannot access a link to their article because it is behind a paywall.)  There is another document available on the internet which does outline cuts to Medicare: The Senior Protection Plan by the Center for American Progress. The Orwellian title (Those sound like  ‘broken promises’ to seniors to me.) belies facts regarding the billions of dollars involved in each of the proposed cuts. The 49 page “deficit hawk” document is worth reading, if only to convince you that the Beltway wizards think they have a real plan. However, Haberkorn & Cunningham demonstrate the long-range implications for these proposed cuts: either beneficiaries are hit with higher copays, deductibles, premiums, and have difficulty finding insurance coverage if eligibility age is raised; or providers are zapped with reduced payments for doctors services and hospital services. In addition, in another significant cut, pharmaceutical companies would have to agreed to significant cuts around 112 billion dollars.  The largest cut would come from raising the Medicare retirement age from 65 to 67, cutting 148 billion dollars between 2012-2021. Other smaller cuts to Medicare cuts would reduce payments for training future doctors (residencies) and payments to hospitals serving special underserved zone hospitals, such as those in rural areas. The CAP plan makes cuts sound all so painless, but the healthcare analysts show that cuts have real consequences for patients and providers.

Update: December 4th, 2012

The most significant change to Medicare found in the Orwellian “Senior Protection Plan” was a strategic move to place Medicare patients into a form of HMO managed care. While advertised as more care for less money, I would describe this as “least amount of healthcare imaginable”, especially as the organization receiving the total payment can skim 60% of the savings of not providing care they were paid to offer.

Here’s a quote:

Under the Affordable Care Act, teams of providers can form “accountable care organizations” that are accountable for all of a patient’s care. Medicare sets a target for Medicare spending for each accountable care organization. If actual spending falls below the target, accountable care organizations can keep up to 60 percent of the savings. They must meet performance targets on measures of the quality of care, and can keep higher shares of savings for higher performance.”


The other insidious reduction made is to Medicaid by mandating that HMO’s in Medicaid stick to a competitive bidding process instead of receiving a fixxed payment from States (which currently sets the standard of care). Folks, this is a race to the bottom.


Reinforcing that this is the Democrat’s plan is the subsequent report, out today, from CAP, which includes 385 billion in cuts, identified as those described above. Spending cuts begin on Page 17.



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