What ObamaCare Means for Seniors

While charges and counter-charges about Medicare are flying back and forth in Washington, hardly anyone seems to have noticed that Medicare’s financial problems have already been solved. They were solved by the health reform bill enacted last year, what some people call ObamaCare.

So why isn’t this front page news? Why aren’t people dancing in the street? Why isn’t the Obama administration boasting about this accomplishment far and wide? Probably because Medicare’s financial problems are slated to be solved by the unconscionable rationing of health care for the elderly and the disabled.

The most recent Medicare Trustees report conveys the same message as the last one: On the day that Barack Obama signed the health reform bill, Medicare’s long-term unfunded liability fell by $53 trillion. That sum is about three times the size of the entire US economy. And, it gets better. Once the baby boomers work their way through the system, Medicare spending will grow no faster than the payroll taxes, premiums and general revenue transfers that pay for that spending.

So what does this mean for senior citizens who rely on Medicare? No one knows for sure. But it almost certainly means they will get less health care.

Don’t Stop Thinking About Tomorrow

Last August, the Office of the Medicare Actuary predicted that within nine years Medicare will be paying doctors less than what Medicaid pays. Think about that. In most places around the country Medicaid patients have extreme difficulty finding doctors who will see them. As a result, they end up seeking care at community health centers and in the emergency rooms of safety net hospitals. In a few more years seniors will be in that same position — with this difference. From a financial point of view, the seniors will be perceived as less desirable customers than welfare mothers. Also, by that point one in seven hospitals will have to leave the Medicare system.

As Medicare Chief Actuary Richard Foster (page 282) said in the 2010 Medicare Trustees’ report, “Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.”

But suppose Congress didn’t intervene. Suppose that the law continues on the books exactly as it is written.

Consider people reaching the age of 65 this year. Under ObamaCare, the average amount spent on these enrollees over the remainder of their lives will fall by about $36,000 at today’s prices. That sum of money is equivalent to about three years of benefits. For 55-year-olds, the spending decrease is about $62,000 — or the equivalent of six years of benefits. For 45-year-olds, the loss is more than $105,000, or nine years of benefits.

In terms of the sheer dollars involved, the planned reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today’s 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.

What does this mean in terms of access to health care? It almost certainly means that seniors will have extreme difficulty finding doctors who will see them and hospitals who will admit them. Once admitted, they will certainly enjoy fewer amenities (no private room, no gourmet meal choices, and no cable TV perhaps) as well as a lower quality of care. We will have a two-tiered health care system, with the elderly getting second class care.

All these problems will be exacerbated by what ObamaCare does in the rest of the health care system. In just two years, 32 million people will become newly insured. If economic studies are correct, they will try to double the amount of health care they have been consuming. In addition, almost everyone else (including most above-average income families) will be forced to obtain more generous insurance than they have today. With more coverage for more services these people will also try to greatly expand their consumption of care. Yet the health reform act did not create one new doctor or nurse or other paramedical personnel to meet this increased demand.

We are about to experience a system wide rationing problem, which will be reflected in longer waits at doctors’ offices, emergency rooms and clinics and delays in getting almost every kind of care.

In such an environment you will be at a real disadvantage if you are in a health plan that pays doctors less than what private plans are paying. The disadvantaged patients will be the elderly and the disabled on Medicare, poor families on Medicaid, and (if Massachusetts is any guide) people who are newly enrolled in government subsidized health plans.

And here is the final tragic irony: The most vulnerable population are the ones whose access to care is likely to decrease the most under a health care act that was widely touted at the time of its passage as a humanitarian measure.

Comments (19)

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  1. Devon Herrick says:

    The Affordable Care Act (ACA) proponents in Congress and the Administration knew better than to announce large cuts in seniors’ Medicare benefits. Rather than increase Medicare cost-sharing, supporters of the ACA proposed to fund expansion of Medicaid and generous exchange subsidies by cutting Medicare provider fees. The problem is: cutting physician fees has the effect of reducing seniors’ access to medical services when fewer doctors feel they can afford to treat Medicare patients. Deep cuts in Medicare physician reimbursements is really a disingenuous way to shift resources from the Medicare program to Medicaid and insurance subsidies. The plan is also somewhat dishonest since many experts — including Medicare’s chief actuary — do not believe Congress will ever follow through and the cuts will ever take place.

  2. Vicki says:

    Great musical pairing.

  3. Ken says:

    You better sign up with a concierge doctor quickly. Wait and it may be too late.

  4. Diana Furchtgott-Roth says:

    The solution, John, is not to grow old. Or, hope that a black market in health services comes to the rescue.

    There is some market activity out there now with “concierge services,” where seniors pay a fixed amount a year for priority treatment. Let’s hope this expands. Baby boomers don’t want flabby stomachs or chins, and they’re not going to put up with flabby health care.

    -Diana Furchtgott-Roth

  5. Patrick Skinner says:

    Excellent post John!! One more point I’ve made in several trips to our Congressman – what smart 18 year old in their right mind would go to school for 12 years, rack up $300k in todays dollars to become a doctor and work for a gov’t dictated fee that would not allow them to repay their loans, much less send their kids to college. The smart ones will become lawyers, which we have toooo many of. Teh doctor shortage will become even worse than you’ve predicted!

  6. Nancy says:

    This is what the Democrats are hoping you won’t notice.

  7. Robin Mayhall says:

    I don’t quite understand why you leave out all of the other Medicare- and Medicaid-related elements of the ACA, such as the one that closes the Medicare Part D donut hole, or the one that provides a 10 percent Medicare bonus payment for primary care physicians and general surgeons. There are many more, as you know. This is a complex law — perhaps too complex, and certainly, absolutely not perfect. But I think you should take all of the variables into account before announcing the sky is falling.

  8. Patrick Skinner says:

    John, Could you do a piece on a 2 tiered system – which I believe we may eventually have. A basic taxpayer supported system of ‘Healthcare for All’ that is RATIONED. Those with money or that feel the need for better more timely services have supplemental insurance to spread the risk of those enhanced services. 2 Medical Provider systems – in Dallas you would have Parkland for all, and the supplemental system would be Baylor – and you would know which hospital was for which plan. The key si for Congress to be honest and explain we CANNOT afford top notch healthcare for all without RATIONING! Without rationing or at least better end of life efficient use of money decisions healthcare will bankrupt our country.

  9. Bob Suter says:

    Patrick is “spot on.”

    Virtually every country in the world, including “commmunist” countries like Vietnam and China, have two tier health systems. Only Canada and the U.S. seem to have an issue with this. It is why we are going bankrupt. When we accept that the health care system is not different we will be on our way to solutions.

    I do have an issue with long lines being described as “rationing.” While long lines are undesirable, it is “queueing”, not rationing. Big difference…

    The term “rationing” is being demonized in this debate, which is not helpful. The concept of rationing is not inherently bad. The free market is actually form of rationing using money as the ration coupon- those who have the most coupons get the most care…(…while again, long lines are not rationing- they just delay everyone recieving the same thing, so they are really just a form of socialism or communism )

    If tomorrow someone invented a technology that reliably prolonged every senior’s life for a year for $1 million per year, should Medicare pay for it?

    If you answer, “no, the country can’t afford that” then you are agreeing to the concept of rationing, and only your “price point” needs to be negotiated. (if you answered “yes” you are not an economist!)

    If you do not want public money spent extravagantly on over the top health care interventions that have not been shown to be effective, and that the recipients can not afford on their own, then you support rationing of healthcare purchased with public funds. Private funds can then be used to buy anything (no rationing except by cost), just like in the rest of the free market.

    Sounds like a pretty conservative approach to me- why don’t we embrace it?

  10. Ernest Angelo Jr says:

    Why don’ the Republicans tell this story? I’ve been reading your posting for months and yet I never see anything nearly as damning about Obama Care from the GOP.

    Don’t they know what is in the law? Do any of them get your messages?

    -Ernest Angelo Jr

  11. Dr Bob Kramer says:

    Isn’t that what the loyal opposition will try to do? Our governor wants to do the same thing for the health care for our children. Everyone needs a medical home with our doctors pledged to provide the best care and utilizing the oversight forces to make sure the patients are getting quality care.

    Dr Bob Kramer

  12. Tom H. says:

    Very good post. This information needs to be widely disseminated.

  13. Donna Baver Rovito says:

    The proportion of applicants to medical schools compared to slots in medical schools began to drop years ago in response to medical liability premiums. I believe there were once five applicants for each slot in an American medical school, and that figure has dropped to two applicants for each seat.

    If this is accurate, it demonstrates an extremely frightening trend – that MANY of our “best and brightest” who might have sought careers in medicine in previous decades will simply take their intelligence, skills and drive to another profession.

    This can only become worse as ObamaCare kicks in, reducing reimbursements, providing NO relief in malpractice premiums….and, of course, the workload in physicians’ futures will be staggering. That’s why I’ve told my oldest son that he’ll go to medical school and become a surgeon like Daddy over Mommy’s DEAD BODY since he was four. No luck, though. Silly boy still thinks we’ll get it “fixed” before he reaches that point…..

  14. wanda j. jones says:


    There is a complementary message to get out–not only does Obamacare shave the truth about itself and snooker the public, but it and all the political talk omit any reference to the ways that the market-based system is innovating freely, from free exams at WalMart to traveling free dental clinics funded by donations. And no one mentions the very high salaries of nurses, much higher than the average patients they serve.

    If Obamacare goes forward, it will destabilize the four main sectors of the healthcare system, (purchasers, plans and providers-and patients waiting for care) many states, and even the Federal government.

    The mystery to me is how policymakers can propose so many radical changes and expect the health system to function as before with no drop in access, quality or attractiveness to future healthcare workers. That is fantasy.

    Wanda J. Jones
    New Century Healthcare System
    San Francisco

  15. Mark Davis, M.D. says:

    Obamacare will eventually fall into a black hole and recede into oblivion. This monstrosity was written by lawyers and will be a boom to their businesses. The nation has been screwed and people should be indignant how this borderline president and his minions have undermined the most important system we have, healthcare. Before you vote in 2012, Read Demons of Democracy. You will discover who is screwing the nation and what to do about it. Please comment at platomd@gmail.com. If the comments are worthy, they will be published in a forthcoming book on this subject.

  16. psicologos en rosario says:

    La psicologia en rosario, santa fe, argentina, relacionada a la medicamentos y la adiccion a morfina y drogas de diversa indole posibilita un tratar para mayor bienestar del paciente y su familia.

  17. Jeanie Vandaveer Drake says:

    Ah, but take heart. Even if Obamacare denies life-saving care for seniors, I believe I read it does provide end-of-life counseling. Whew!

  18. Larry Gagnon says:

    Putting politics aside for a moment, what choice do we have as a society when the cost of providing medical care to the old bastards (me, for example) and the low income (me, for example)continues to grow at such high rates. I do not think it reasonable that I should receive Rolls Royce medical care unless I am able and willing to pay a goodly amount of it. If we continue to pay for such medical care, we will have to raise taxes on almost all levels of income earners or institute a new non-income tax (e.g. national sales tax). Does anyone seriously disagree with this premise? Really? If I get VW medical care for free, I am grateful. I am well into my retirement years and do not expect to live forever. I hope some other oldies agree with me.

  19. Larry Gagnon says:

    I just read comments from Bob Suter and Patrick Skinner. Congratulations to both for their rational approach. No society has unlimited resources. We should strive to allocate limited resources in a rational manner.

    My subjective view is that the military consumes too much of our resources. I believe that we spend several times as much as any other nation on earth. I had thought, quite naively, that Vietnam taught us something about the limits of military power, but then we invaded Iraq.

    I would prefer to overspend on medical care than overspend on the military – but we do both.