NCPA - National Center for Policy Analysis

Is Granny "disposable"?

August 9, 2010

President Obama's new health law cuts $200 billion from Medicare Advantage, a public-private "hybrid" of Medicare.   As a result, more than 11 million seniors will likely see their Medicare Advantage premiums rise significantly or their benefits noticeably lessened.   Either way, it will violate President Obama's promise that all who liked their current coverage would be able to keep it under ObamaCare, says the Heritage Foundation. 

But ObamaCare giveth what it taketh away.  And the $200 billion it takes away from the seniors' program will go to finance new entitlements for younger, healthier Americans, says Heritage. 

Too bad for the oldsters, says Heritage: 

  • Even before ObamaCare, Medicare had racked up unfunded obligations of $38 trillion.
  • But rather than restructure Medicare to remedy the program's fundamental fiscal problems, ObamaCare proponents opted to siphon off $200 billion and use it to start an entirely new -- and equally financially unsustainable -- health program for even more people. 

Congress would do much better by converting Medicare from a defined benefits program to a defined contribution system, says Heritage: 

  • Seniors would then apply their contribution to the health plan of their choice -- with those opting for a richer benefit package paying the additional cost.
  • Meanwhile, Congress should plow any "savings" it can find within Medicare (such as the $200 billion cut to Medicare Advantage) back into the program.  

Cutting seniors' benefits to create costly new entitlements for younger Americans may help President Obama "spread the wealth around," but in the process it just hastens the nation's journey down the road to fiscal disaster, says Heritage. 

Source: Kathryn Nix and Caitlin Harman, "Is Granny 'disposable'? Some seniors may get that impression once ObamaCare kicks in," Heritage Foundation, August 6, 2010. 

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