Analysis: A closer look at Medicare claims in U.S. Senate ads

An ongoing debate about how the Affordable Care Act will affect Medicare is sparking debate in South Dakota’s U.S. Senate race.

A TV ad being aired by one of the Republican candidates for Senate claims the Affordable Care Act, or Obamacare, “is taking over $700 billion dollars from Medicare to fund Obamacare.”

Mike Rounds, the candidate running the ad, says in it the $700 billion transfer is “a misguided plan which can limit health care to seniors ... by reducing payments for services that they may need” in the ad.

Democratic U.S. Senate candidate Rick Weiland calls that a “false claim” and says Rounds needs to pull his ad.

Rounds is running in the June 3 Republican primary against Annette Bosworth, Stace Nelson, Jason Ravnsborg and Larry Rhoden. Weiland is unopposed for the Democratic nomination.

The truth behind this hotly contested claim depends on semantics and accounting rules.

It’s true that the Affordable Care Act will spend about $718 billion less on Medicare during the next decade than would have happened without the law — around a 10 percent reduction. The overall budget for Medicare still is expected to go up over this time — just less quickly than it otherwise would have.

The reductions also don’t affect all of Medicare. Seniors’ core benefits won’t be affected. Instead, that $718 billion comes from two primary areas: eliminating a subsidy for private insurance companies offering Medicare Advantage plans, and slowing the rate of growth in payments to hospitals and other health providers.

The Medicare Advantage cuts save an estimated $156 billion over 10 years, while slowing provider payments saves $415 billion. The rest of the savings come from other, smaller areas.

It’s also true that while the money will be removed from future Medicare budgets, it won’t be withdrawn from the Medicare trust fund, as the ad’s use of the word “taken” could imply.

Much of the debate has centered on Medicare Advantage, which covers around 30 percent of Medicare recipients, according to data from the Kaiser Family Foundation. Under this program, seniors can purchase private insurance, and Medicare pays much of the cost.

These plans can be cheaper than traditional Medicare for seniors, though seniors on those plans are more limited in which providers they can see.

At the time the Affordable Care Act was passed in 2009, though, Medicare Advantage plans were costing the government more than people on traditional Medicare. Insurance companies providing Medicare Advantage will receive less money under the Affordable Care Act, an attempt to bring the cost of those plans down for the government.

The big question is whether these cuts to the insurance companies and providers will end up affecting Medicare recipients — and, if so, how much.

Rounds argued insurance companies and providers could respond to cuts by dropping plans or refusing to take Medicare customers.

“If you reduce the number of dollars on a procedural basis, you will reduce the availability of those services in the future,” Rounds said.

Weiland said that won’t happen. So many people are on Medicare, he said, that companies will want its business even if they have to accept lower profit margins to do so.

“They want the business just as much as people want affordable health care,” Weiland said. “They’re just going to have to compete.”

Most experts acknowledge that companies could respond to the Medicare cuts by passing on the pain to beneficiaries. Analyses by Time Magazine and Politico raise the possibility, as does an examination by Richard Foster, then the chief Medicare actuary.

But no one is certain about whether this will occur — or whether the cuts largely will target wasted overpayments. Foster’s analysis notes that some medical providers “could” see their profitability threatened by the cuts, which “might” cause them to pull out of the program, which could “possibly” threaten Medicare recipients’ access to care.

So far, that hasn’t happened in Medicare Advantage, an analysis by fact-checking website PolitiFact found — though that doesn’t mean it won’t happen in the future.

“Coverage has stayed largely the same, premiums have been flat and enrollment has gone up since the legislation became law,” PolitiFact Florida staff writer Joshua Gillin wrote.

Rounds’ ad, though, is phrased carefully. It says the $700 billion cut “can” end up limiting health care for seniors — not that it definitely will. On Tuesday, Rounds said he thinks that’s a “very likely” outcome but isn’t necessarily certain.

This keeps the ad’s claim factually correct, though the ad omits important context about the cuts. Some similar claims about the Medicare cuts that fact-checkers have ruled untrue have used stronger language saying seniors will suffer, not that they might.